-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D+awR/LreWH8tNIiwUdjDGMeqz54r0W00h+2/fUkwXdSWu1Nzi/flpDl/XI6hzeT MGHwTCFmxjBenIs3McESxg== 0000950129-01-500891.txt : 20010518 0000950129-01-500891.hdr.sgml : 20010518 ACCESSION NUMBER: 0000950129-01-500891 CONFORMED SUBMISSION TYPE: 20-F PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMVESCAP PLC/LONDON/ CENTRAL INDEX KEY: 0000914208 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 20-F SEC ACT: SEC FILE NUMBER: 001-13908 FILM NUMBER: 1642729 BUSINESS ADDRESS: STREET 1: 11 DEVONSHIRE SQUARE STREET 2: LONDON EC2M 4YR CITY: ENGLAND STATE: X0 BUSINESS PHONE: 442076263434 MAIL ADDRESS: STREET 1: 11 DEVONSHIRE SQUARE STREET 2: LONDON EC2M 4YR CITY: ENGLAND FORMER COMPANY: FORMER CONFORMED NAME: AMVESCAP /LONDON/ DATE OF NAME CHANGE: 19971121 FORMER COMPANY: FORMER CONFORMED NAME: AMVESCO PLC /LONDON/ DATE OF NAME CHANGE: 19970612 FORMER COMPANY: FORMER CONFORMED NAME: INVESCO PLC /LONDON DATE OF NAME CHANGE: 19940107 20-F 1 h86436e20-f.txt AMVESCAP PLC - 12/31/2000 1 United States Securities and Exchange Commission Washington, D.C. 20549 FORM 20-F [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD Commission File Number 1-13908 AMVESCAP PLC ------------------------------------------------------- (Exact name of registrant as specified in its charter) England ------------------------------------------------- (Jurisdiction of incorporation or organization) 11 Devonshire Square, London, EC2M 4YR, United Kingdom ------------------------------------------------------ (Address of principal executive offices) Securities registered pursuant to Section 12(b) of the Act: (Name of each exchange Title of each class on which registered) - ------------------------------------------------- ----------------------- American Depositary Shares each representing New York Stock Exchange 2 Ordinary Shares of 25 pence par value per share Ordinary Shares of 25 pence par value per share London Stock Exchange SBF - Paris Bourse New York Stock Exchange(1) Securities registered pursuant to Section 12(g) of the Act: NONE Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: NONE Indicate the number of shares outstanding of each of the issuer's classes of capital or common stock, as of the close of the period covered by the annual report. Outstanding at Class December 31, 2000 - ----------------------------------- ----------------- Ordinary Shares, 25 pence par value 771,037,502 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate by check mark which financial statement item the registrant has elected to follow. [X] Item 17 [ ] Item 18 - -------- (1) Listed, not for trading but only in connection with the listing of American Depositary Shares pursuant to requirements of the Securities and Exchange Commission. The Ordinary Shares' primary trading market is the London Stock Exchange. 2 TABLE OF CONTENTS
Item 1. Identity of Directors, Senior Management and Advisers...........................................1 Item 2. Offer Statistics and Expected Timetable.........................................................1 Item 3. Key Information.................................................................................1 Selected Financial Data.........................................................................1 First Quarter Results and Recent Events.........................................................3 Dividends.......................................................................................3 Exchange Rates..................................................................................4 Financial Statements and Reports................................................................5 Risk Factors....................................................................................5 Changes in Market Conditions; Retention of Assets Under AMVESCAP's Management..........5 Retention of AMVESCAP's Key Personnel..................................................6 Competition to AMVESCAP................................................................6 Regulation of AMVESCAP.................................................................6 Exchange Rates.........................................................................7 Risks to Holders of ADSs......................................................7 Risks to U.S. and Non-U.S. Investors..........................................7 Limited Market for ADSs................................................................7 Item 4. Information on the Company......................................................................7 History and Development of AMVESCAP.............................................................7 Business Overview...............................................................................8 Operating Groups................................................................................9 Managed Products.......................................................................9 U.S. Institutional....................................................................11 INVESCO Global........................................................................11 INVESCO Retirement....................................................................12 AMVESCAP's Business Strategy..........................................................13 Globalization................................................................13 Diverse Product Offerings....................................................13 Multiple Distribution Channels...............................................13 Alignment of Interests of Employees and Shareholders.........................13 Competition ..........................................................................13 Management Contracts..................................................................14 Government Regulations................................................................14 AMVESCAP's Organizational Structure............................................................15 Property.......................................................................................17 Item 5. Operating and Financial Review and Prospects...................................................17 General........................................................................................17 Results of Operations..........................................................................19 2000 Compared to 1999..........................................................................19 Assets Under Management...............................................................19 Operating Results.....................................................................20 Managed Products......................................................................21 U.S. Institutional....................................................................21 INVESCO Global........................................................................21 INVESCO Retirement....................................................................21 New Business Expense..................................................................22 Corporate.............................................................................22 Taxation..............................................................................22 1999 Compared to 1998..........................................................................22
i 3 Assets Under Management...............................................................22 Operating Results.....................................................................22 Managed Products......................................................................23 U.S. Institutional....................................................................23 INVESCO Global........................................................................23 INVESCO Retirement....................................................................23 New Business Expense..................................................................23 Corporate.............................................................................23 Taxation..............................................................................24 Liquidity and Capital Resources................................................................24 Cash Flows............................................................................24 Company Borrowings....................................................................24 Dividends.............................................................................25 Industry Outlook...............................................................................25 Summary of Differences between U.K. GAAP and U.S. GAAP.........................................25 New Accounting Standards.......................................................................26 Cautionary Statements Concerning Forward-Looking Statements....................................26 Item 6. Directors, Senior Management and Employees.....................................................27 Directors and Senior Management................................................................27 Salary, Bonus and Other Benefits......................................................31 Pension Rights........................................................................32 AMVESCAP Global Stock Plan............................................................32 INVESCO Employee Stock Ownership Plan.................................................33 AMVESCAP Executive Share Option Schemes...............................................33 Options to Purchase Securities from AMVESCAP..........................................33 Board Practices................................................................................34 Employees......................................................................................35 Share Ownership................................................................................36 Item 7. Major Shareholders and Related Party Transactions..............................................37 Major Shareholders.............................................................................37 Related Party Transactions.....................................................................38 Item 8. Financial Information..........................................................................38 Legal Proceedings..............................................................................38 Distributions..................................................................................38 Changes in Financial Information...............................................................38 Item 9. The Offer and Listing..........................................................................38 Nature of Trading Market.......................................................................38 Item 10. Additional Information.........................................................................39 Memorandum and Articles of Association.........................................................39 Directors.............................................................................39 Rights attaching to AMVESCAP Shares...................................................40 Dividends and entitlement in the event of liquidation to any surplus..................40 Material Contracts.............................................................................41 Exchange Controls..............................................................................43 Taxation.......................................................................................43 Item 11. Qualitative and Quantitative Disclosures About Market Risk.....................................45 Item 12. Description of Securities Other than Equity Securities.........................................45 Item 13. Defaults, Dividend Arrearages and Delinquencies................................................45 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds...................45 Item 15. [Reserved].....................................................................................45 Item 16. [Reserved].....................................................................................46 Item 17. Financial Statements...........................................................................46 Item 18. Financial Statements...........................................................................46 Item 19. Exhibits.......................................................................................46
ii 4 PART I ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not applicable. ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable. ITEM 3. KEY INFORMATION SELECTED FINANCIAL DATA SELECTED CONSOLIDATED FINANCIAL INFORMATION The following tables present selected consolidated financial information for AMVESCAP as of and for the five fiscal years ended December 31, 2000. The financial statement information as of and for each of the years in the five year period ended December 31, 2000, has been derived from the Consolidated Financial Statements, which for each year in such five year period, have been audited by Arthur Andersen, independent auditors. The Consolidated Financial Statements are prepared in accordance with U.K. GAAP (defined below), which differs in certain significant respects from U.S. GAAP (defined below). For a discussion of the principal differences between U.K. GAAP and U.S. GAAP, see "Item 5. Operating and Financial Review and Prospects" and Note 22 to the Consolidated Financial Statements. The selected consolidated financial information should be read together with the Consolidated Financial Statements and related notes beginning on page F-1 of this Form 20-F and "Item 5. Operating and Financial Review and Prospects".
FOR THE YEAR ENDED DECEMBER 31, --------------------------------------------------------------------- 2000(1) 1999 1998(2) 1997(3) 1996 (IN THOUSANDS, EXCEPT PER ORDINARY SHARE AND ADS DATA) (pound (pound (pound (pound (pound sterling) sterling) sterling) sterling) sterling) PROFIT AND LOSS DATA: Amounts in accordance with U.K. GAAP Revenues ..................................... 1,628,662 1,072,350 802,172 530,659 236,235 Operating profit before goodwill amortization and exceptional item......... 588,911 352,713 257,316 186,086 64,259 Goodwill amortization......................... (56,417) (36,754) (21,221) -- -- Operating profit before exceptional item........................................ 532,494 315,959 236,095 186,086 64,259 Exceptional item.............................. (51,804) -- (48,600) -- -- Profit before taxation........................ 446,233 283,042 161,478 177,293 65,981 Profit for the financial year................. 288,530 181,032 94,105 117,014 44,995 Earnings per share: Basic.................................... 42.6p 28.3p 15.7p 22.7p 17.7p Diluted.................................. 40.5p 27.1p 14.7p 20.8p 16.1p Earnings per share before exceptional item and goodwill amortization: Basic.................................... 55.7p 34.0p 26.0p 22.7p 17.7p Diluted.................................. 53.0p 32.7p 24.3p 20.8p 16.1p Approximate amounts in accordance with U.S. GAAP Profit for the financial year................. 180,710 88,034 44,251 68,953 31,052 Earnings per share: Basic.................................... 26.7p 13.8p 7.4p 13.4p 12.2p Diluted.................................. 25.6p 13.2p 7.0p 12.4p 11.3p Earnings per share before goodwill amortization: Basic.................................... 44.6p 29.2p 20.8p 22.0p 17.5p Diluted.................................. 42.6p 28.0p 19.5p 20.2p 16.0p
1 5
AS OF DECEMBER 31, ------------------------------------------------------------------- 2000(1) 1999 1998(2) 1997(3) 1996 (IN THOUSANDS) (pound (pound (pound (pound (pound sterling) sterling) sterling) sterling) sterling) BALANCE SHEET DATA: Amounts in accordance with U.K. GAAP Total assets........................ 4,295,758 1,826,800 1,610,815 420,848 370,384 Current maturities of debt.......... 6,839 -- 7,195 25,991 132,055 Long-term debt, excluding current Maturities..................... 960,023 659,120 686,010 203,598 27,415 Ordinary and Exchangeable Shares.... Value........................... 669,912 168,617 167,506 148,855 67,848 Number of shares outstanding.... 814,598 674,468 670,023 595,419 271,391 Net assets/capital and reserves..... 2,103,080 436,661 330,970 (21,462) 112,362 Approximate capital and reserves in accordance with U.S. GAAP ............. 3,018,621 1,337,312 1,255,106 996,362 139,882
FOR THE YEAR ENDED DECEMBER 31, ----------------------------------------------------------------------- 2000(1) 1999 1998(2) 1997(3) 1996 (IN THOUSANDS) (pound (pound (pound (pound (pound sterling) sterling) sterling) sterling) sterling) OTHER DATA: Amounts in accordance with U.K. GAAP Cash provided by operations......... 580,968 369,745 134,466 234,000 54,289 EBITDA(4) .......................... 659,665 431,063 309,459 218,689 74,003 Approximate EBITDA(4) in accordance with U.S. GAAP....................... 662,422 414,634 281,112 214,625 74,309 Dividends per share (pence).............. 10 9 8 7 6 Dividends per share (cents).............. 15 15 13 11 9
AS OF DECEMBER 31, ----------------------------------------------------------------------- 2000(1) 1999 1998(2) 1997(3) 1996 (IN MILLIONS) Total assets under management at year end ........................... $402,564 $357,417 $275,405 $192,245 $ 94,483
- ------------------- (1) Includes the results of Trimark (defined below) from August 1, 2000 and the December 31, 2000 balance sheet of Perpetual plc. (2) Includes the results of GT Global (defined below) from June 1, 1998. AMVESCAP acquired GT Global on May 29, 1998. (3) Includes the results of AIM (defined below) from March 1, 1997. AIM merged into a subsidiary of AMVESCAP on February 28, 1997. (4) EBITDA consists of earnings before taxation and exceptional item and excluding interest expense, depreciation and amortization charges. EBITDA is presented because AMVESCAP believes that EBITDA may be useful to investors as an indicator of funds available to AMVESCAP, which may be used to pay dividends, to service debt, to make capital expenditures and for working capital purposes. EBITDA should not be construed as an alternative to (i) operating profit (as determined in accordance with U.K. GAAP or U.S. GAAP) as an indicator of AMVESCAP's operating performance, (ii) cash flows from operating activities (as determined in accordance with U.K. GAAP or U.S. GAAP) as a measure of liquidity or (iii) other consolidated profit or cash flow statement data determined in accordance with U.K. GAAP or U.S. GAAP. 2 6 FIRST QUARTER RESULTS AND RECENT EVENTS AMVESCAP's profit before tax, exceptional item and goodwill amortization for the three months ended March 31, 2001 amounted to (pound Sterling) 135.0 million compared to (pound sterling) 124.7 million for the first quarter of 2000. Diluted earnings per share before exceptional item and goodwill amortization amounted to 11.1p for the first quarter of 2001 (first quarter 2000: 12.5p), which represented a decrease of 11%. AMVESCAP's revenues increased to (pound sterling) 427.3 million during the first quarter of 2001 from (pound sterling) 369.5 million during the same period in 2000. EBITDA reached (pound sterling) 166.6 million for the first quarter of 2001, which represented an increase of (pound sterling) 20.1 million over the same period in 2000. AMVESCAP's operating profit before exceptional item and goodwill amortization totaled (pound sterling) 146.3 million during the first quarter of 2001 compared to (pound sterling) 131.9 million during the same period in 2000, which represented an increase of (pound sterling) 14.4 million. AMVESCAP's operating margin for the first quarter of 2001 was 34.2%, compared to 35.7% for the first quarter of 2000. AMVESCAP's assets under management totaled $370.3 billion at March 31, 2001, which represented a decrease of $32.3 billion from December 31, 2000. Approximately 40% of AMVESCAP's total assets under management were invested in fixed income securities at March 31, 2001. AMVESCAP acquired County Investment Management Limited, a leading Australian institutional asset manager, on January 31, 2001 for a purchase price of approximately (pound sterling) 39.4 million. The results for County Investment Management have been included in AMVESCAP's financial statements from February 1, 2001. This acquisition had no material effect on AMVESCAP's consolidated financial statements. AMVESCAP recognized a (pound sterling) 4.2 million exceptional item during the first quarter 2001 related to County Investment Management integration activities. In April 2001, AMVESCAP acquired National Asset Management Corporation, a leading U.S. institutional investment manager based in Louisville, Kentucky, for a purchase price of $200 million paid in equal amounts of cash and Ordinary Shares. The transaction also includes contingent earn out payments of up to $75 million (based on achieving certain compound annual revenue growth rates over the next three years) and retention payments payable over five years totaling $25 million. The results for National Asset Management Company will be included in AMVESCAP's financial statements from May 1, 2001. On April 27, 2001, AMVESCAP announced that it had agreed to acquire Boston-based Pell Rudman & Co., Inc. ("Pell Rudman"). Pell Rudman provides asset management services to high net worth individuals, families, foundations and endowments. The purchase will consist of a cash payment of $172 million and potential asset retention payments of up to $28 million over two years. The transaction is subject to regulatory approval and is expected to close in the third quarter of 2001. DIVIDENDS AMVESCAP's practice has been to pay an interim dividend and a final dividend in respect of each fiscal year. The interim dividend is generally payable in October of each year by resolution of the Board of Directors of AMVESCAP, and the final dividend is payable after approval of AMVESCAP's financial statements and such dividend by the shareholders at the Annual General Meeting in the year following the fiscal year to which it relates. The declaration, payment and amount of any future dividends will be declared or recommended by the Board of Directors of AMVESCAP and will depend upon, among other factors, AMVESCAP's earnings, financial condition and capital requirements at the time such declaration and payment are considered. See "Item 10. Additional Information" for further discussion of AMVESCAP's dividend policy. See "Item 5. Operating and Financial Review and Prospects" for a discussion of restrictions on AMVESCAP's ability to declare dividends. 3 7 The following table sets forth the interim, final and total dividends paid per Ordinary Share (defined below) in respect of each year indicated, and translated into U.S. dollars per ADS (defined below):
YEAR ENDED PENCE PER ORDINARY SHARE(1) U.S. CENTS PER ADS(1)(2) ------------ ------------------------------------ -------------------------------- DECEMBER 31, INTERIM FINAL TOTAL INTERIM FINAL TOTAL ------------ ------- ----- ----- ------- ----- ----- 1996 2.00 4.00 6.00 6.26 13.26 19.52 1997 2.50 4.50 7.00 8.08 14.74 22.82 1998 3.00 5.00 8.00 10.11 15.69 25.79 1999 3.50 5.50 9.00 11.55 17.17 28.72 2000 4.00 6.00 10.00 11.55 17.19 28.74
- ---------------- (1) For information on taxes applicable to dividends, see "Item 10. Additional Information - Taxation". (2) Based on Noon Buying Rates (defined below) in effect at the respective payment dates, and adjusted to reflect the one-for-two adjustment to the Ordinary Share per ADS ratio in April 1998, and the change in the Ordinary Share per ADS ratio from five-for-one to two-for-one on November 8, 2000. EXCHANGE RATES AMVESCAP publishes its consolidated financial statements in pounds sterling. References in this report to "U.S. dollars", "$" or "cents" are to United States currency and references to "pounds sterling", "(pound sterling)", "pence" or "p" are to United Kingdom currency. A discussion of the effects of currency translations and fluctuations on AMVESCAP's results is contained in "Item 5. Operating and Financial Review and Prospects". Cash dividends are declared and paid in pounds sterling but are paid at a date subsequent to their declaration. Therefore, holders of AMVESCAP's American Depositary Shares (the "ADSs"), each representing 2 Ordinary Shares of AMVESCAP of 25 pence par value per share (the "Ordinary Shares"), are exposed to currency fluctuations from the date of declaration of the dividend to the date when the pounds sterling are converted to U.S. dollars by The Bank of New York (the "Depositary") for distribution to ADS holders. Additionally, currency fluctuations will affect the U.S. dollar equivalent of the pounds sterling price of AMVESCAP's Ordinary Shares on the London Stock Exchange (the "LSE") and, as a result, are likely to affect the market price of the ADSs on the New York Stock Exchange (the "NYSE"). The following tables set forth, for the periods and dates indicated, certain information concerning the Noon Buying Rate for pounds sterling expressed in U.S. dollars per (pound sterling) 1.00. The "Noon Buying Rate" is the noon buying rate in the City of New York for cable transfers in pounds sterling as certified for customs purposes by the Federal Reserve Bank of New York on the date specified. On February 28, 2001, the Noon Buying Rate was $1.45 per (pound sterling) 1.00. These translations are not representations that the pounds sterling amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated or at any other rate. We do not use such rates in the preparation of our Consolidated Financial Statements. EXCHANGE RATES
YEAR ENDED DECEMBER 31, YEAR END AVERAGE(1) HIGH LOW ----------------------- -------- ---------- ---- --- 1996 1.71 1.56 1.71 1.49 1997 1.65 1.64 1.71 1.58 1998 1.66 1.66 1.71 1.61 1999 1.62 1.62 1.68 1.55 2000 1.49 1.51 1.65 1.40
- ---------------- (1) The average of the exchange rates on the last trading day of each month during the relevant period. 4 8
MONTH HIGH LOW ----- ---- --- April 2001 1.45 1.42 March 2001 1.47 1.42 February 2001 1.48 1.45 January 2001 1.46 1.50 December 2000 1.46 1.45 November 2000 1.43 1.42
FINANCIAL STATEMENTS AND REPORTS AMVESCAP's Ordinary Shares are listed for trading on the LSE and SBF -- Paris Bourse. Our Ordinary Shares also trade under the symbol "AVZ" on the Frankfurt Stock Exchange. Our ADSs are listed for trading on the NYSE. Each of our ADSs represents two Ordinary Shares or the right to receive two Ordinary Shares deposited with the Depositary. The Depositary issues American Depositary Receipts ("ADRs"), which may represent any number of ADSs. The Exchangeable Shares (defined below) and ESDs (defined below), both of which were issued by a subsidiary of AMVESCAP, are listed for trading on the Toronto Stock Exchange and AMVESCAP's 6.375% Senior Exchange Notes due 2003 and its 6.600% Senior Exchange Notes due 2005 are listed on the Luxembourg Stock Exchange. This report contains the consolidated balance sheets of AMVESCAP as of December 31, 2000 and 1999 and statements of profit and loss, total recognized gains and losses, shareholders' funds and cash flows for the years ended December 31, 2000, 1999 and 1998 (the "Consolidated Financial Statements"). The Consolidated Financial Statements and other financial information concerning AMVESCAP included in this Form 20-F and in our annual and semi-annual reports are presented in conformity with generally accepted accounting principles in the United Kingdom ("U.K. GAAP"). U.K GAAP as applied to AMVESCAP differs in certain important respects from generally accepted accounting principles in the United States ("U.S. GAAP"). A description of the principal differences between U.K. GAAP and U.S. GAAP for AMVESCAP and a reconciliation to U.S. GAAP net income and shareholders' equity are contained in the notes to the Consolidated Financial Statements. We furnish the Depositary with annual reports containing a review of operations, audited consolidated financial statements prepared in accordance with U.K. GAAP and an opinion on the financial statements by our independent auditors. We also furnish the Depositary with semi-annual reports containing unaudited interim condensed consolidated financial information prepared in accordance with U.K. GAAP. The Depositary arranges for the mailing of our reports to all record holders of ADSs. In addition, we furnish the Depositary with copies of all notices of shareholders' meetings and other reports and communications that are distributed generally to our shareholders, and the Depositary arranges for the mailing of such notices, reports and communications to all record holders of ADSs. AMVESCAP is currently exempt from the rules under the Securities Exchange Act of 1934, as amended, prescribing the form and content of proxy statements. RISK FACTORS CHANGES IN MARKET CONDITIONS; RETENTION OF ASSETS UNDER AMVESCAP'S MANAGEMENT AMVESCAP derives most of its revenues from investment management contracts with clients. Under these contracts, the investment management fee paid to AMVESCAP is typically based on the market value from time to time of assets under management. Accordingly, fluctuations in the prices of securities may have a material effect on AMVESCAP's consolidated revenues and profitability. Fees vary with the type of assets being managed, with higher fees earned on actively managed equity and balanced accounts and lower fees earned on fixed income and stable return accounts. In addition, investment management contracts are generally terminable upon 30 or fewer days' notice. Mutual fund and unit trust investors may generally withdraw their funds at any time without prior notice. Institutional clients may elect to terminate their relationship with AMVESCAP or reduce the 5 9 aggregate amount of assets under management, and individual clients may elect to close their accounts or redeem their shares in AMVESCAP's mutual funds, or shift their funds to other types of accounts with different rate structures, for any of a number of reasons, including investment performance, changes in prevailing interest rates and financial market performance. Poor performance relative to other investment management firms tends to result in decreased sales, increased redemptions of fund shares, and the loss of private institutional or individual accounts, with corresponding decreased revenues to AMVESCAP. Failure of AMVESCAP's funds to perform well could, therefore, have a material adverse effect on AMVESCAP. RETENTION OF AMVESCAP'S KEY PERSONNEL Retaining key personnel is important to AMVESCAP's ability to attract and retain clients and retail shareholder accounts. The market for investment management professionals is competitive and has grown more so in recent periods as the investment management industry has experienced growth. AMVESCAP's policy has been to provide its investment management professionals with compensation and benefits which AMVESCAP believes to be competitive with other leading investment management firms. However, there can be no assurance that AMVESCAP will be successful in retaining its key personnel. A significant loss of key personnel, should it occur, could have a material adverse effect on AMVESCAP. COMPETITION TO AMVESCAP The investment management business is highly competitive, with competition based on a variety of factors including the range of products offered, brand recognition, investment performance, business reputation, financing strength, the strength and continuity of institutional, management and producer relationships, quality of service, the level of fees charged for services and the level of commissions and other compensation paid and distribution support offered to financial intermediaries. AMVESCAP and its business units compete in every market in which they operate with a large number of investment management firms, commercial banks, investment banks, broker-dealers, insurance companies and other financial institutions. Some of these institutions have greater capital and other resources, and offer more comprehensive lines of products and services, than AMVESCAP. The recent trend toward consolidation within the investment management industry has served to increase the strength of a number of AMVESCAP's competitors. Additionally, there are relatively few barriers to entry by new investment management firms, and the successful efforts of new entrants into AMVESCAP's various lines of business around the world, including major banks, insurance companies and other financial institutions, have also resulted in increased competition. Competitors of AMVESCAP are also seeking to expand market share in different products and services offered by AMVESCAP. Additionally, the independent financial intermediaries who distribute certain of AMVESCAP's products also distribute numerous competing products, including products sponsored by the firms that employ such financial intermediaries. REGULATION OF AMVESCAP As with all investment management companies, AMVESCAP's operating groups are heavily regulated in almost all countries in which they conduct business. Laws and regulations applied at the national, state or provincial and local level generally grant governmental agencies and industry self- regulatory authorities broad administrative discretion over the activities of AMVESCAP and its business units, including the power to limit or restrict business activities. Possible sanctions include the revocation of licenses to operate certain businesses, the suspension or expulsion from a particular jurisdiction or market of any of AMVESCAP`s business organizations or their key personnel, and the imposition of fines and censures. It is also possible that laws and regulations governing AMVESCAP`s operations or particular investment products could be amended or interpreted in a manner that is adverse to AMVESCAP. To the extent that existing or future regulations affecting the sale of AMVESCAP's products and services or AMVESCAP's investment performance of AMVESCAP's products, AMVESCAP's aggregate assets under management and its revenues could be adversely affected. 6 10 EXCHANGE RATES RISKS TO HOLDERS OF ADSS Cash dividends are declared and paid in pounds sterling but are paid at a date subsequent to their declaration. Therefore, holders of ADSs are exposed to currency fluctuations from the date of declaration of the dividend to the date when the pounds sterling are converted to U.S. dollars by the Depositary for distribution to ADS holders. Additionally, currency fluctuations will affect the U.S. dollar equivalent of the pounds sterling price of the Ordinary Shares on the LSE and, as a result, are likely to affect the market price of the ADSs on the NYSE. RISKS TO U.S. AND NON-U.S. INVESTORS The majority of AMVESCAP's net assets, revenues and expenses, as well as its assets under management, are presently derived from the United States where the functional currency is the U.S. dollar, while its financial statements are reported in pounds sterling. As a result, fluctuations in the U.S. dollar to pounds sterling exchange rate may affect the reported financial results of AMVESCAP from one period to the next. AMVESCAP does not actively manage its exposure to such effects. Consequently, changes in the U.S. dollar to pounds sterling exchange rate could have a material impact on the reported financial results of AMVESCAP. Currency fluctuations will also affect the U.S. dollar equivalent of the pounds sterling price of the Ordinary Shares on the LSE and, as a result, are likely to affect the market price of the ADSs on the NYSE. LIMITED MARKET FOR ADSS Although the ADSs trade on the NYSE the daily trading volume is limited. The Ordinary Shares are not listed on the NYSE and there is no trading market for the Ordinary Shares in the United States. ITEM 4. INFORMATION ON THE COMPANY HISTORY AND DEVELOPMENT OF AMVESCAP AMVESCAP PLC was incorporated as a U.K. company on December 19, 1935 under the laws of England. See "Government Regulations" below for information on the legislation under which the company operates. AMVESCAP's principal executive offices are located in leased office space at 11 Devonshire Square, London, EC2M 4YR, England, and our telephone number is 011-44-207-626-3434. AMVESCAP has a home page on the Internet at www.amvescap.com. Information contained in our home page shall not be deemed to be part of this Form 20-F. In recent years, AMVESCAP has experienced substantial growth, both internally and through acquisitions, including the 1997 merger of A I M Management Group Inc. ("AIM") into a subsidiary of AMVESCAP (the "AIM Merger"), the 1998 acquisition (the "GT Acquisition") of several business units within the Asset Management Division of Liechtenstein Global Trust AG ("GT Global"), the August 1, 2000 acquisition of Trimark Financial Corporation ("Trimark") and the December 2000 acquisition of Perpetual plc. See "Item 3. Key Information - First Quarter Results and Recent Events" for information on recent AMVESCAP acquisitions. During the annual periods ending December 31, 2000, 1999 and 1998, AMVESCAP's capital expenditures were L.63.5 million, L.58.5 million and L.59.1 million, respectively. These expenditures related in each year to technology initiatives, including new platforms from which to maintain AMVESCAP's portfolio management systems and fund tracking systems, improvements in computer hardware and software desktop products for employees, new telecommunications products to enhance AMVESCAP's internal information flow, and back-up disaster recovery systems. Also in each year, a portion of these 7 11 costs related to leasehold improvements made to the various buildings and workspaces used in AMVESCAP's offices. Since December 31, 2000, AMVESCAP's capital projects have included continuing technological enhancements to computer hardware and software in its U.S. offices. These projects have been funded with proceeds from AMVESCAP's operating cash flows. During the annual periods ending December 31, 2000, 1999 and 1998, and since December 31, 2000, AMVESCAP's capital divestitures were not significant relative to its total fixed assets. BUSINESS OVERVIEW AMVESCAP is one of the world's largest independent investment management complexes, with $402.6 billion of assets under management at December 31, 2000. We provide our clients with a broad array of domestic, foreign and global investment products. We have a significant presence in the institutional and retail segments of the investment management industry in North America, Europe and Asia. Our business is focused primarily on investment management. We operate through various subsidiaries and divisions throughout the world. We are committed to managing assets regionally and believe that our local investment managers provide us with a competitive advantage. We have a team of approximately 1,200 investment professionals located around the world. In addition, we offer multiple investment styles for the various investment objectives and asset classes of the products we offer. Our products include equity, balanced, fixed income, money market and real estate investment portfolios. Approximately two-thirds of our assets under management as of December 31, 2000 were invested in equities, and approximately one-third was invested in fixed income securities. We use several methods to distribute our products to retail and institutional clients in each market where we are located. In North America, we offer load and no-load mutual funds, separate account management and "wrap" accounts. "Wrap" accounts offer individuals and smaller institutions comprehensive investment management services under a single-fee structure covering substantially all charges, including investment management, brokerage, custody, recordkeeping and reporting. Outside of North America, we offer unit trusts and other European and Asian mutual funds, and private account management for retail and institutional investors. Our retail and institutional clients are located in more than 100 countries. Our business units work together to provide products and services to our clients. A variety of advisory and sub-advisory arrangements allow our business units to access specific areas of investment management expertise located elsewhere in AMVESCAP. We believe that our ability to develop and distribute products across businesses via multiple delivery channels allows us to offer our clients a broader range of products and services. 8 12 AMVESCAP is organized into four operating groups: MANAGED PRODUCTS which manages and distributes: (i) the AIM family of 83 load mutual funds in the United States, (ii) the INVESCO family of 46 load and no-load mutual funds in the United States, and (iii) 39 load mutual funds in Canada; U.S. INSTITUTIONAL which manages portfolios for institutional investors in the United States and provides services through wrap accounts; INVESCO GLOBAL which conducts our operations outside North America, including retail and institutional investment management and related marketing activities primarily in Europe and Asia; and INVESCO RETIREMENT which distributes AMVESCAP investment management products by developing, marketing, managing and providing administrative and related services to defined contribution plans, such as 401(k) plans, and related retirement products throughout the world. See Note 3 to the Consolidated Financial Statements for a geographical analysis of AMVESCAP's total revenues during 2000, 1999 and 1998. AMVESCAP OPERATING STRUCTURE (AS OF DECEMBER 31, 2000)
MANAGED U.S. INVESCO INVESCO PRODUCTS INSTITUTIONAL GLOBAL RETIREMENT ----------------- --------------- --------------- -------------- (pound (pound (pound (pound sterling) sterling) sterling) sterling) REVENUES 1,064.5m 193.3m 321.9m 48.9m OPERATING PROFIT 513.0m 45.4m 90.0m 4.0m ASSETS UNDER MANAGEMENT $ 236.4b $ 93.2b $ 73.0b $ 27.6b* HEADCOUNT 4,741 753 2,186 407
- ------------------ * INVESCO Retirement had $27.6 billion in assets under administration as of December 31, 2000, compared to $23.6 billion as of December 31, 1999, of which 82% and 87% were invested in AMVESCAP products in 2000 and 1999, respectively. OPERATING GROUPS MANAGED PRODUCTS Managed Products manages and distributes mutual funds and related products sold to retail and institutional investors primarily within North America. Managed Products consists of three business units: (i) AIM, (ii) INVESCO Funds Group, Inc. ("INVESCO Funds Group") and (iii) AIM Funds Management Inc., a Canadian business unit ("AIM Canada"). These business units offer equity and fixed income mutual funds invested in the U.S. and international markets, including funds that target particular market sectors. Each of the three business units of Managed Products offers equity, balanced, fixed income and money market funds. The investment strategies used by the business units of Managed Products range from aggressive 9 13 growth to capital appreciation to a combination of growth and income to fixed income. The products offered by each of these business units are described below.
INVESCO AIM FUNDS GROUP AIM CANADA ------------------------- -------------------------- ------------------------- PRODUCTS 83 retail mutual fund 46 retail mutual fund 39 retail mutual fund portfolios portfolios portfolios STOCK SELECTION PROCESS Bottom-up stock Bottom-up stock Investment managers at selection approach selection approach AIM Canada use a bottom-up stock selection approach; other units of AMVESCAP serve as advisors for certain AIM Canada funds and use varied approaches PRIMARY SALES CHANNEL Load funds sold through Load and no-load funds Load funds sold through financial sold directly to financial intermediaries intermediaries (wire investors and through houses, regional financial intermediaries broker-dealers, banks and selected third-party and financial planners) networks BRAND NAME The AIM Family of Funds INVESCO Funds The AIM Family of --Registered Trademark-- --Registered Trademark-- Funds(TM), Trimark Investments(TM)
AIM is the largest business unit in Managed Products. AIM's bottom-up approach toward equity investing centers on the concept that stock prices eventually follow earnings, and companies with superior earnings provide significantly higher returns than companies without such earnings. AIM also provides advisory services to mutual funds managed by companies unaffiliated with AMVESCAP. In addition, AIM offers funds specially designed for separate insurance company accounts. Customers of AIM's money market funds included nine of the ten largest U.S. banks and 21 of the 25 largest U.S. banks in terms of asset size on December 31, 2000. INVESCO Funds Group's equity staff uses a bottom-up, fundamental investment approach to find the most promising growth companies. INVESCO Funds Group looks for growth stocks of companies that are leaders in high growth industries and which have experienced strong returns and cash flow. The managers of the Trimark equity mutual funds employ a bottom-up stock selection approach. The managers consider themselves "business people buying businesses". The managers evaluate company management, the competitive position of the company within the industry, any proprietary advantage the company possesses, and focus on what they pay for the business or the company's valuation. Some of the AIM funds and INVESCO funds are sub-advised by other AMVESCAP business units that have expertise in the specific markets in which such funds are invested. AIM and INVESCO Funds Group also provide advisory services to certain AIM Canada funds and to mutual funds managed by other AMVESCAP business units. We believe that this structure allows our business units to combine the economies and quality control made possible by centralized professional management with the diversity of investment management style and depth of expertise made possible through an integrated global network of investment advisers. 10 14 U.S. INSTITUTIONAL U.S. Institutional manages portfolios of equity, balanced, fixed income, real estate and private capital investments for institutional clients and provides services through wrap accounts. U.S. Institutional's clients include: o corporate pension plans; o public and municipal pension plans; o Taft/Hartley pension plans; o insurance companies and banks; and o non-profit organizations. Risk ---------------- Fixed Income Real Estate Balanced Structured Equity Traditional Equity Global Private Capital ------------------ Return Potential - --------------- (1) Structured equity products consist of investments selected to meet clients' return and risk objectives through various quantitative techniques and asset allocation models. U.S. Institutional also provides advisory or sub-advisory services to funds offered by other AMVESCAP business units. U.S. Institutional employs growth, value-oriented and quantitative approaches to select securities for equity portfolios. The group uses quantitative and value approaches to select securities for fixed income portfolios. U.S. Institutional customizes its product offerings and stock selection approaches to meet the varied investment objectives of AMVESCAP's diverse client base. U.S. Institutional products and services are marketed by a team of marketers organized by client type. INVESCO GLOBAL INVESCO Global comprises AMVESCAP's operations outside North America, including retail and institutional investment management and related marketing activities primarily in the U.K., Continental Europe and Asia. 11 15 AMVESCAP believes that one of its strengths is its expertise in investing in many of the world's financial markets. A principal task of INVESCO Global is to coordinate the construction of global portfolios and market AMVESCAP's global investment management services. INVESCO Global tailors its marketing strategy to respond to the relevant competitive environment in each country or region. Units of INVESCO Global market investment products through independent brokers, alliances with major financial organizations and direct sales to institutional investors buying for their own accounts. INVESCO Global serves institutional and individual investors primarily in the U.K., Continental Europe and Asia. INVESCO Global operates through 24 offices located around the world. INVESCO Global's main investment offices are located in the following cities: o London o Frankfurt o Melbourne o Henley-on-Thames o Tokyo o Atlanta o Paris o Hong Kong o Milan INVESCO Global provides various services, including management, distribution, administration and shareholder support services, to the following types of clients: o unit trusts and other mutual funds, including offshore mutual funds; o investment trusts (closed-end investment companies); o personal equity plans and individual savings accounts (tax-advantaged plans invested in managed investment products for U.K. citizens); o institutional separate accounts with assets invested in Europe, emerging markets and global fixed income securities; and o European and international private investors. INVESCO Global business units also provide advisory or sub-advisory services to investment products offered by other business units of AMVESCAP. INVESCO RETIREMENT INVESCO Retirement gathers investment assets for AMVESCAP by developing, marketing, managing and providing administrative and related services to defined contribution plans, such as 401(k) plans, and related retirement products throughout the world. INVESCO Retirement provides a full range of services to various retirement accounts, focusing on accounts invested in AMVESCAP investment products. Services provided include custodian, recordkeeping, administration, compliance, and client employee education and communication services. INVESCO Retirement sells its services on a full service basis and markets AMVESCAP investment products and services to clients who receive administration services from other providers. One unit of INVESCO Retirement is a U.S. national trust bank that provides custody and trust services to retirement accounts, including offering collective trust funds sub-advised by AMVESCAP units. INVESCO Retirement also includes a unit that focuses on capturing IRA rollovers, a unit that markets and supports AMVESCAP participation in international defined contribution pension markets, and a unit that develops strategic partnerships with other service providers. AMVESCAP's retirement services are distributed through four primary channels: o a direct sales force calling on plan sponsors and consultants; o alliances with other service providers that deliver AMVESCAP's investment products to their service accounts; o broker-dealer distribution channels; and o strategic partnerships with other service providers. 12 16 AMVESCAP'S BUSINESS STRATEGY We have developed a strategy based on elements which we believe are essential to maintain a significant presence in the global asset management industry - globalization, diverse product offerings and multiple distribution channels. In addition, we believe that an experienced staff of professional employees whose interests are aligned with shareholders is a key factor in our ability to implement our goals. GLOBALIZATION We believe that the investment management industry will continue to become more global in scope, and that large investment management companies that can locally manage investments for clients in different international markets will be in the strongest position to compete successfully. We have established offices with investment and client service professionals in each of the major world capital markets. We intend to continue to expand our global operations to take advantage of geographic markets where we believe the investment management business has the potential for substantial growth. DIVERSE PRODUCT OFFERINGS We believe that our ability to offer a full range of retail and institutional investment products managed locally in a wide variety of investment styles enhances our opportunities for attracting new clients and cross-selling our products to existing clients. Our broad product line includes a large and varied number of equity products, the fastest growing segment of the investment management industry. Our strategy is to seek to capitalize further on this shift as the demand for equity products continues to increase around the world. MULTIPLE DISTRIBUTION CHANNELS Our extensive distribution network enables us to market our products to retail and institutional clients in more than 100 countries throughout the world. We sell our products directly to investors through 42 offices in 25 countries. We also maintain an extensive distribution network through strategic relationships with a variety of financial intermediaries, including major wire houses, regional broker-dealers, banks and financial planners in North America, and independent brokers and financial organizations in Europe and Asia. We seek to sell our products through available distribution channels and to expand our existing distribution network. ALIGNMENT OF INTERESTS OF EMPLOYEES AND SHAREHOLDERS We view our experienced management team as a key factor in our growth. Although we are a sizable public company, our management philosophy is entrepreneurial and decentralized, with senior professionals having significant responsibility and autonomy. We believe that our structure allows each operating group to focus on and maximize local investment opportunities, compete more effectively in sales and marketing efforts and operate more efficiently. We also believe that stock ownership by management and other employees is an important means of aligning their interests with those of our shareholders. We have implemented various employee benefit plans to facilitate stock ownership by management and employees. COMPETITION The investment management business is highly competitive, with competition based on a variety of factors, including: (i) the range of products offered, (ii) brand recognition, (iii) investment performance, (iv) business reputation, (v) financial strength, (vi) the strength and continuity of institutional, management and producer relationships, (vii) quality of service, (viii) the level of fees charged for services, and (ix) the level of commissions and other compensation paid, and distribution support offered, to financial intermediaries. 13 17 We compete with a large number of investment management firms, commercial banks, investment banks, broker-dealers, insurance companies and other financial institutions. Some of these institutions have greater capital and other resources, and offer more comprehensive lines of products and services, than AMVESCAP. Competition in the investment management industry has increased as a result of the recent trend toward consolidation. We believe that our recent substantial growth and multiple channels of distribution will enable us to compete effectively in the investment management business. We also believe that, over time, institutional investors will seek to reduce the number of specialist firms managing their assets and that larger firms, with the ability to manage funds in a number of different management styles and in a number of different markets, will have a competitive advantage. We believe that we are well positioned to capitalize on this trend. MANAGEMENT CONTRACTS AMVESCAP derives most of its revenues from investment management contracts with clients. Fees vary with the type of assets being managed, with higher fees earned on actively managed equity and balanced accounts and lower fees earned on fixed income and stable return accounts. In addition, investment management contracts are generally terminable upon 30 or fewer days' notice. Mutual fund and unit trust investors may generally withdraw their funds at any time without prior notice. Institutional clients may elect to terminate their relationship with AMVESCAP or reduce the aggregate amount of assets under management, and individual clients may elect to close their accounts or redeem their shares in AMVESCAP's mutual funds, or shift their funds to other types of accounts with different rate structures, for any of a number of reasons, including investment performance, changes in prevailing interest rates and financial market performance. GOVERNMENT REGULATIONS As with all investment management companies, our operations and investment products are heavily regulated in almost all countries in which our business units conduct business. Laws and regulations applied at the national, state or provincial and local level generally grant government agencies and industry self-regulatory authorities broad administrative discretion over the activities of AMVESCAP's business units, including the power to limit or restrict business activities. Possible sanctions include the revocation of licenses to operate certain businesses, the suspension or expulsion from a particular jurisdiction or market of any of our business organizations or their key personnel, and the imposition of fines and censures. It is also possible that laws and regulations governing our operations or particular investment products could be amended or interpreted in a manner that is adverse to us. We conduct substantial business operations in the U.S. Various subsidiaries of AMVESCAP and/or products and services offered by such units are regulated in the U.S. by the U.S. Securities and Exchange Commission (the "SEC"), the National Association of Securities Dealers, Inc., the National Futures Association, the Commodity Futures Trading Commission and the Office of the Comptroller of the Currency. Federal statutes that regulate the products and services offered by AMVESCAP in the U.S. include the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940 and the Employee Retirement Income Security Act of 1974. Various business units of AMVESCAP are regulated in the United Kingdom by the Investment Management Regulatory Organization, the Personal Investment Authority, the Financial Services Authority and the Securities and Futures Authority. Our operations elsewhere in the world are regulated by similar regulatory organizations. Our principal German and Austrian operations are required by local regulations to have a banking license and thus are also subject to banking regulations. Other regulators who potentially exert a significant impact on our businesses around the world include the Ministry of Finance in Japan, the Banque de France and Commission des Operations de Bourse in France, the Central Bank of Ireland, the Pension Fund Supervisions Office (UNFE) in Poland and the Canadian securities administrators. 14 18 Certain of our subsidiaries are required to maintain minimum levels of capital. These and other similar provisions of applicable law may have the effect of limiting withdrawals of capital, repayment of intercompany loans and payment of dividends by such entities. To the extent that existing or future regulations affecting the sale of our products and services or our investment strategies cause or contribute to reduced sales of our products or impair the investment performance of our products, our aggregate assets under management and revenues might be adversely affected. AMVESCAP'S ORGANIZATIONAL STRUCTURE AMVESCAP acts as the holding company of an investment management complex, the principal activities of which are asset management and the provision of related financial services. The principal subsidiaries of AMVESCAP which are included in the consolidation of AMVESCAP's results (all of which are wholly-owned companies) are set out below:
REGISTERED OFFICE NAME OF COMPANY (OR PRINCIPAL PLACE OF BUSINESS) --------------- -------------------------------- AMVESCAP Group Services, Inc. 1315 Peachtree Street, NE Atlanta, Georgia 30309 USA INVESCO Bank Oesterreich AG Rotenturmstrasse 16-18 A0 1010 Vienna Austria INVESCO Benelux S.A. The Blue Tower Avenue Louise 326 B-1050 Brussels Belguim INVESCO France S.A. 19 rue du General Foy, 75008 Paris France INVESCO Bank OHG Bleichstrasse 60-62, 60313 Frankfurt am Main INVESCO Asset Management Deutschland GmbH Federal Republic of Germany INVESCO Kapitalanlagegesellschaft mbH INVESCO Fondsservice GmbH INVESCO UK Limited (Branch Office - Italy) Via Cordusio, 2 INVESCO Italia SGR SpA 20123 Milan Italy INVESCO UK Limited (Branch Office - The Netherlands) Concertgebouwplein 15 1071 LL Amsterdam The Netherlands INVESCO Asset Management Limited, Sucursal en Calle Recoletos No. 15 , 1st Floor Espana (Branch Office - Spain) 28001 Madrid Spain INVESCO Asset Management (Switzerland) Ltd. Genferstrasse 21 CH-8027 Zurich Switzerland INVESCO UK Limited 11 Devonshire Square INVESCO Asset Management Limited London EC2M 4YR United Kingdom INVESCO Fund Managers Limited INVESCO Private Portfolio Management Limited Perpetual Unit Trust Management Limited Perpetual Park Perpetual Portfolio Management Limited Perpetual Park Drive Perpetual Investment Management Services Limited Henley-on-Thames Perpetual Investments Limited Oxfordshire RG9 1HH United Kingdom INVESCO Asset Management (Japan) Limited 16th Floor Imperial Tower 1-1-1, Uchisaiwai-cho Chiyoda-ku Tokyo 100-0011 Japan
15 19
REGISTERED OFFICE NAME OF COMPANY (OR PRINCIPAL PLACE OF BUSINESS) --------------- -------------------------------- INVESCO Asia Limited 12th Floor INVESCO Asset Management Asia Limited Three Exchange Square 8 Connaught Place Central, Hong Kong INVESCO Asset Management Singapore Ltd 16, Collyer Quay #24-02 Hitachi Tower Singapore 049318 INVESCO Global Asset Management (N.A.), Inc. 1360 Peachtree Street N.E., Suite 100 Atlanta, Georgia 30309 USA INVESCO Asset Management Asia Limited 1201, 12th Floor, Lotus Building (Representative Office - Taiwan) 136 Jen Ai Road, Section 3 Taipei Taiwan INVESCO Global Asset Management de Argentina S.A. Torre Alem Plaza Av. Leandro N. Alem 855 Piso 4 C1001AAD Buenos Aires Argentina INVESCO Asset Management Australia Ltd. Suite 2404, Level 24 Westpac Plaza 60 Margaret Street Sydney, New South Wales 2000 Australia County Investment Management Limited Level 20 333 Collins Street Melbourne, Victoria 3000 Australia INVESCO, Inc. 1360 Peachtree Street N.E., Suite 100 Atlanta, Georgia 30309 USA 50 California Street, 27th Floor San Francisco, California 94111 USA 101 Federal Street Boston, Massachusetts 02110 USA One Lincoln Center, Suite 700 5400 LBJ Freeway LB2 Dallas, Texas 75240 USA 400 West Market Street, Suite 3300 Louisville, Kentucky 40202 USA A I M Management Group Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 USA 301 Congress Ave., Suite 1700 Austin, Texas 78701-4041 USA AIM Funds Management Inc. 120 Bloor Street East, Suite 700 Toronto, Ontario M4W 1B7 Canada 5140 Younge Street, Suite 900 Toronto, Ontario M2N 6X7 Canada INVESCO Funds Group Inc. 7800 East Union Avenue, Suite 800 Denver, Colorado 80237 USA INVESCO Retirement, Inc. 400 Colony Square 1201 Peachtree Street N.E., Suite 2200 Atlanta, Georgia 30361 USA 3334 Healy Drive Winston-Salem, North Carolina 27103 USA
16 20 PROPERTY AMVESCAP's principal executive offices are located in leased office space at 11 Devonshire Square, London, EC2M 4YR, England. Our North American executive offices are located in leased office space at 1315 Peachtree Street, Atlanta, Georgia 30309. We also lease significant office space at 11 and 12 Greenway Plaza, Houston, Texas 77046 and 7800 East Union Avenue, Denver, Colorado 80237. We generally lease space in the locations where we conduct business. ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS This discussion and analysis should be read in conjunction with the Selected Consolidated Financial Information and the Consolidated Financial Statements and the related notes thereto included elsewhere in this Form 20-F. The Consolidated Financial Statements are prepared in accordance with U.K. GAAP, which differs in certain significant respects from U.S. GAAP. For a discussion of the principal differences between U.K. GAAP and U.S. GAAP, see "Summary of Differences Between U.K. GAAP and U.S. GAAP" below and Note 22 to the Consolidated Financial Statements. GENERAL AMVESCAP is a leading independent global investment management complex, with $402.6 billion of assets under management at December 31, 2000. AMVESCAP operates in North America under the AIM, INVESCO and Trimark brand names. AMVESCAP is a holding company that offers a broad array of domestic, foreign and global investment products and services to institutions and individuals across many distribution channels. AMVESCAP currently provides services to clients in more than 100 countries, employs 8,259 people in over 25 countries and manages more than 1,600 separate institutional accounts and 565 retail funds. AMVESCAP derives its revenues primarily from fees for investment advisory services provided to institutional clients, open-end funds (including U.S. mutual funds and European and Asian unit trusts), closed-end funds (including U.S. closed-end funds and U.K. investment trusts), collective accounts (including U.S. trust company collective funds), high net-worth individuals and U.S. "wrap" accounts. In addition, it derives revenues from fees for services, which include distribution, trustee and transfer agent services. AMVESCAP also earns revenues from front-end fees and commissions related to trading activities. AMVESCAP's operating expenses primarily consist of compensation, technology and marketing expenses. A significant portion of these expenses is variable in nature, which allows AMVESCAP greater flexibility to maintain costs consistent with revenue streams. AMVESCAP is organized into four operating groups: (1) Managed Products, (2) U.S. Institutional, (3) INVESCO Global and (4) INVESCO Retirement. The following is an analysis of the changes in assets under management by operating group over the last three years. 17 21 CHANGES IN ASSETS UNDER MANAGEMENT(1)
MANAGED PRODUCTS ------------------- INVESCO FUNDS U.S. INVESCO TOTAL AIM(2) GROUP INSTITUTIONAL GLOBAL ------ ------ -------- ------------- -------- (IN BILLIONS) Assets under management at December 31, 1997 ....................... $192.2 $ 83.4 $ 18.0 $ 72.4 $ 18.5 Acquisitions ............................ 46.8 9.8 -- 19.6 17.3 Market gains ............................ 26.2 11.4 3.3 10.3 1.1 Net new (lost) business ................. 4.6 2.7 1.6 (2.4) 2.7 Change in U.S. money market funds ....... 4.7 4.4 -- 0.3 -- Foreign currency (3) .................... 1.0 (0.2) -- -- 1.1 ------ ------ -------- ------------- -------- Assets under management at December 31, 1998 ....................... $275.4 $111.6 $ 22.9 $ 100.1 $ 40.8 Market gains ............................ 57.5 30.0 8.3 6.7 12.5 Net new (lost) business ................. 10.6 7.6 3.4 (5.0) 4.6 Change in U.S. money market funds ....... 17.0 17.0 -- -- -- Transfers ............................... -- (1.0) (0.2) (1.3) 2.5 Foreign currency (3) .................... (1.1) 0.1 -- -- (1.2) Other (4) ............................... (2.0) -- -- -- (2.0) ------ ------ -------- ------------- -------- Assets under management at December 31, 1999 ....................... $357.4 $165.3 $ 34.4 $ 100.5 $ 57.2 Market gains ............................ (32.8) (19.5) (5.5) 0.6 (8.4) Acquisitions ............................ 34.1 16.7 -- -- 17.4 Net new (lost) business ................. 35.4 20.4 13.0 (8.0) 10.0 Change in U.S. money market funds ....... 12.9 10.9 1.3 -- 0.7 Transfers ............................... -- -- -- 0.1 (0.1) Foreign currency (3) .................... (4.4) (0.6) -- -- (3.8) ------ ------ -------- ------------- -------- Assets under management at December 31, 2000 ....................... $402.6 $193.2 $ 43.2 $ 93.2 $ 73.0 ====== ====== ======== ============= ========
- ---------- (1) INVESCO Retirement had $27.6 billion, $23.6 billion, $15.0 billion and $10.6 billion in assets under administration as of December 31, 2000, 1999, 1998 and 1997, respectively. (2) Includes assets under management for AIM and AIM Canada. (3) The exchange movement results from different exchange rates being in effect as of the relevant measurement dates for assets denominated in currencies other than U.S. dollars. (4) Adjusted for assets held in custody without fee, and assets replaced by service fees. 18 22 RESULTS OF OPERATIONS The following is a summary of operating profit data by operating group before goodwill amortization and exceptional item:
FOR THE YEAR ENDED DECEMBER 31, 2000(1) -------------------------------------------------------------------- (IN THOUSANDS) REVENUES EXPENSES OPERATING PROFIT (pounds (pounds (pounds sterling) sterling) sterling) Managed Products......................... 1,064,530 (551,562) 512,968 U.S. Institutional....................... 193,311 (147,929) 45,382 INVESCO Global........................... 321,923 (231,917) 90,006 INVESCO Retirement....................... 48,898 (44,941) 3,957 New Business Expense..................... -- (15,422) (15,422) Corporate ............................... -- (47,980) (47,980) ----------- ------------ --------- 1,628,662 (1,039,751) 588,911 =========== ============ =========
FOR THE YEAR ENDED DECEMBER 31, 1999 -------------------------------------------------------------------- (IN THOUSANDS) REVENUES EXPENSES OPERATING PROFIT (pounds (pounds (pounds sterling) sterling) sterling) Managed Products......................... 644,814 (356,912) 287,902 U.S. Institutional....................... 172,657 (112,333) 60,324 INVESCO Global........................... 223,913 (174,340) 49,573 INVESCO Retirement....................... 30,966 (33,906) (2,940) New Business Expense .................... -- (11,840) (11,840) Corporate ............................... -- (30,306) (30,306) ------------ ----------- ---------- 1,072,350 (719,637) 352,713 ============ =========== ==========
FOR THE YEAR ENDED DECEMBER 31, 1998(2) -------------------------------------------------------------------- (IN THOUSANDS) REVENUES EXPENSES OPERATING PROFIT (pounds (pounds (pounds sterling) sterling) sterling) Managed Products......................... 488,936 (290,562) 198,374 U.S. Institutional....................... 143,221 (88,027) 55,194 INVESCO Global........................... 150,511 (118,784) 31,727 INVESCO Retirement....................... 19,504 (26,811) (7,307) New Business Expense .................... -- (3,920) (3,920) Corporate (16,752) (16,752) ----------- ------------- ---------- -- 802,172 (544,856) 257,316 =========== ============= ==========
- ------------------------------------ (1) Includes the results of Trimark from August 1, 2000. AMVESCAP acquired Trimark on August 1, 2000. (2) Includes the results of GT Global from June 1,1998. AMVESCAP acquired GT Global on May 29, 1998. 2000 COMPARED TO 1999 ASSETS UNDER MANAGEMENT Assets under management were $402.6 billion at December 31, 2000. This reflects an increase of $45.2 billion during the year. Net new business of $35.4 billion contributed to the increase. AMVESCAP's acquisitions of Trimark and Perpetual plc added $34.1 billion of assets as of the dates of such acquisitions. Market loss accounted for a $32.8 billion decrease in assets under management. Average assets under management were $388.5 billion for 2000 compared to $294.9 billion for 1999. The 32% increase in average assets was due to the strength of net new business and the strong capital 19 23 markets in the early part of 2000, aided by acquisitions. At December 31, 2000, approximately two-thirds of AMVESCAP's assets under management were invested in equity securities and one-third in fixed income securities. OPERATING RESULTS 2000 marked another record year for AMVESCAP, particularly as every major capital market index experienced sharp declines during the year. Profit before tax, exceptional item and goodwill amortization increased 73% to (pound sterling) 554.5 million from (pound sterling) 319.8 million in 1999. Diluted earnings per share before exceptional item and goodwill amortization increased 62% to 53.0p for the 2000 year (1999: 32.7p). Revenues amounted to (pound sterling) 1.6 billion compared to (pound sterling) 1.1 billion in 1999. Earnings before interest, taxes, depreciation and amortization ("EBITDA") reached (pound sterling) 659.7 million for 2000, compared to (pound sterling) 431.1 million for the 1999 period. Operating profit before exceptional items and goodwill amortization totaled (pound sterling) 588.9 million in 2000 (1999: (pound sterling) 352.7 million), an increase of (pound sterling) 236.2 million. The operating margin for 2000 was 36.2%, compared to 32.9% in the prior year. AMVESCAP completed the acquisition of Canadian-based Trimark on August 1, 2000. Consideration for this purchase amounted to approximately (pound sterling) 1.2 billion and was satisfied by the payment of (pound sterling) 331.1 million in cash, the issuance of 26.4 million Ordinary Shares or shares exchangeable for Ordinary Shares (the "Exchangeable Shares") and (pound sterling) 574 million in equity subordinated debentures ("ESDs"). AMVESCAP's 2000 results include the results of Trimark from August 1, 2000. AMVESCAP also acquired Perpetual plc, a leading U.K. retail fund manager in December 2000. This acquisition was recorded as of December 31, 2000, was valued at approximately (pound sterling) 1.0 billion and was completed by the issuance of 60.1 million Ordinary Shares, payment of (pound sterling) 181.9 million in cash and the issuance of (pound sterling) 128.9 million in loan notes due in 2005 (the "Loan Notes"). The results of Perpetual plc will be included in AMVESCAP's financial statements beginning January 1, 2001. Trimark is being integrated with the existing AIM Canada business and the INVESCO Global and Perpetual plc businesses are being combined in the U.K. The cost of these integration activities ((pound sterling) 43.8 million) coupled with personnel-related restructuring charges for the U.S. Institutional business (pound sterling) .8.0 million) have been reflected as an exceptional item in 2000. The total exceptional items amounted to (pound sterling) 32.6 million after tax (4.6p per diluted share). Substantially all revenues arise from management and distribution fees generated from assets under management. Revenues increased 52% over 1999 levels due to the inclusion of Trimark's results for five months in 2000 and revenues generated from the increased levels of assets under management. Operating expenses before exceptional item increased 39% to (pound sterling) 1.0 billion (1999: (pound sterling) 719.6 million), due primarily to increased staff costs. Compensation and related expenses amounted to (pound sterling) 623.5 million (1999: (pound sterling) 430.2 million), or 60% of total operating expenses for both 2000 and 1999. Headcount levels increased to 8,259 employees at the end of 2000 from 5,545 at the end of 1999, due primarily to staff added from acquisitions and increased volumes in the business. Marketing costs were (pound sterling) 152.4 million, or 15% of total operating expenses in 2000, a 51% increase from the prior year as AMVESCAP continued to promote its AIM and INVESCO brands. Technology costs accounted for 11% of the total operating expenses for 2000 compared to 13% in 1999. Variable costs accounted for approximately 25% of total expenses for both years. AMVESCAP has significant operations in the U.S. with earnings denominated in U.S. dollars. Accordingly, the results of AMVESCAP can be materially affected by the U.S. dollar to pounds sterling exchange rate. It is not AMVESCAP's policy to hedge the translation of profit from U.S. subsidiaries; therefore, changes in exchange rates can materially affect the results of AMVESCAP. The average 20 24 U.S. dollar to pounds sterling exchange rate in 2000 was $1.49 per (pound sterling) 1.00, compared with $1.62 per (pound sterling) 1.00 in 1999. MANAGED PRODUCTS Managed Products produced another year of record performance, with revenues up 65% to (pound sterling) 1.1 billion and operating profits of (pound sterling) 513.0 million, a 78% increase over 1999. Net new business totaled $33.4 billion for Managed Products in 2000, up from $11.0 billion in 1999. These net new business flows reflect the strength of the AIM and INVESCO brands coupled with excellent investment performance. Assets under management totaled $236.4 billion at the end of 2000, an increase of 18% for the year. The acquisition of Trimark, when combined with AIM Canada, created Canada's second largest mutual fund management company with a broad range of products and distribution channels. Operating margins increased to 48% in 2000 (45% in 1999), as a result of the increased business volumes in the current year. U.S. INSTITUTIONAL U.S. Institutional underwent a period of restructuring which, when coupled with a difficult period for value investment managers, resulted in a reduced level of operating profits before exceptional item of (pound sterling) 45.4 million (1999: (pound sterling) 60.3 million), and revenues of (pound sterling) 193.3 million for the year compared to (pound sterling) 172.7 million for 1999. Operating margins declined from 35% in 1999 to 23% in 2000. Assets under management were $93.2 billion at the end of 2000, which represented a decline of $7.3 billion from the end of 1999 as U.S. Institutional continued to experience shifts from its core value equity products. This period of change is drawing to a close which should lead to improved operating results for U.S. Institutional in 2001 and beyond. Marketing activity for U.S. Institutional as a whole continues to be very strong, with $13.7 billion in new gross sales in 2000. U.S. Institutional has one of the industry's broadest ranges of products, which includes a recently developed global balanced product, and it is attracting non-U.S. institutions to its structured U.S. equity products. The alternative asset products division of U.S. Institutional successfully brought new private equity and secured loan products to the market during a challenging period. INVESCO GLOBAL The acquisition of Perpetual plc was the final highlight to a year of significant achievement for INVESCO Global. INVESCO Global leveraged its infrastructure, resulting in operating profits of (pound sterling) 90.0 million in 2000, which represented an increase of 82% over 1999, and a record operating margin level of 28% for the year. Assets under management were $73.0 billion at December 31, 2000, compared to $57.2 billion at the end of 1999. This 28% increase was due to record gross sales of $31.2 billion experienced across the business coupled with the strength in the markets. Assets under management in Continental Europe doubled during 2000. INVESCO Global's net sales in Asia grew over 60% during 2000. INVESCO Global's presence in the U.K. markets and in the offshore product range also reached record levels due to strong investment performance and marketing successes. AMVESCAP's acquisition of County Investment Management Limited (with $5.1 billion in assets under management as of the date of acquisition on January 31, 2001) expanded INVESCO Global's position in Australia, one of the world's fastest growing pension markets. INVESCO RETIREMENT INVESCO Retirement continued its strong momentum in 2000 with net sales of $5 billion, which represented a 52% increase over 1999, and brought assets under administration to $27.6 billion for all distribution channels at December 31, 2000, which represented a 17% increase over 1999. The number of plans under administration grew by 38% and the number of plan participants rose to 381,000. Internationally, INVESCO Retirement helped launch products in Hong Kong's state-sponsored pension system and entered the U.K. defined contribution market. 21 25 NEW BUSINESS EXPENSE New business expense contains costs associated primarily with AMVESCAP's efforts in the international defined contribution markets in the U.K., Poland and Hong Kong. Increases in costs over 1999 reflect AMVESCAP's entrance into certain markets in Continental Europe. CORPORATE Corporate expenses include staff costs related to general corporate financial and administrative employees and continued expenditures in AMVESCAP-wide initiatives. Increases in expenses over 1999 relate to increases in headcount necessitated by AMVESCAP's global expansion. TAXATION AMVESCAP's effective tax rate on ordinary profit (before goodwill amortization and exceptional item) was 31.9% in 1999 and 2000. 1999 COMPARED TO 1998 ASSETS UNDER MANAGEMENT Assets under management were $357.4 billion at December 31, 1999. This reflected an increase of $82.0 billion during the year. Market gains accounted for a $57.5 billion increase in assets under management. Net new business of $10.6 billion also contributed to the increase. At December 31, 1999, approximately two-thirds of AMVESCAP's assets under management were invested in equity securities and one-third in fixed income securities. Average assets under management were $294.9 billion for the year ended December 31, 1999, compared to $232.9 billion for the year ended December 31, 1998. OPERATING RESULTS 1999 marked another record year for AMVESCAP. Revenues increased (pound sterling) 270.2 million to (pound sterling) 1.1 billion (1998 (pound sterling) 802.2 million), an increase of 34% over 1998 revenues. Profit before tax, goodwill amortization and exceptional item increased 38% to (pound sterling) 319.8 million for 1999 from (pound sterling) 231.3 million in 1998. Diluted earnings per share before goodwill amortization and exceptional item increased 35% to 32.7p for the 1999 year (1998: 24.3p). Basic earnings per share before goodwill amortization and exceptional item increased to 34.0p (1998: 26.0p). Operating profit before goodwill amortization and exceptional items totaled (pound sterling) 352.7 million in 1999 (1998: (pound sterling) 257.3 million), an increase of (pound sterling) 95.4 million from 1998. The Company's 1998 results include the results of GT Global from June 1, 1998, and include an exceptional charge of (pound sterling) 48.6 million relating to the integration of this business. The Company's results for 1999 did not include an exceptional charge. Operating expenses increased 32% to (pound sterling) 719.6 million in 1999 (1998: (pound sterling) 544.9 million), due primarily to increased staff costs. Compensation and related expenses amounted to (pound sterling) 430.2 million (1998: (pound sterling) 321.9 million), or 60% of total operating expenses. Headcount levels increased by 660 to 5,545 total employees at the end of 1999, due primarily to increased volumes in the business. Marketing costs represented approximately 14% of total operating costs in 1999, a 19% increase from 1998 as AMVESCAP continued to promote its AIM and INVESCO brands. Technology costs increased as investments were continually made to increase the effectiveness of AMVESCAP's systems and for increased business volumes. Variable costs accounted for approximately 25% of total expenses, versus 30% in 1998. 22 26 During 1999, AMVESCAP had significant operations in the U.S. with earnings denominated in U.S. dollars. Accordingly, the results of AMVESCAP could be materially affected by the U.S. dollar to pounds sterling exchange rate. It was not AMVESCAP's policy to hedge the translation of profit from U.S. subsidiaries; therefore, changes in exchange rates could materially affect the results of AMVESCAP. The average U.S. dollar to pounds sterling exchange rate in 1999 was $1.62 per L.1.00, compared with $1.66 per L.1.00 in 1998. MANAGED PRODUCTS Managed Products had an exceptional year in 1999 with revenues and operating profits reaching record levels for both AIM and INVESCO Funds Group. AIM and INVESCO Funds Group had net new business of $7.6 billion and $3.4 billion, respectively, during 1999, fueled by excellent investment performance, continued promotion of brand names and record gross sales levels. According to an independent survey conducted by Kanon Block Carre, a Boston research firm, AIM's and INVESCO Funds Group's diversified U.S. equity funds ranked third in investment performance among the ten largest U.S. fund groups with a combined asset weighted return of 35.7% for 1999. Assets under management increased to $199.7 billion at December 31, 1999, an increase of $65.2 billion for the year. U.S. INSTITUTIONAL Revenue and operating profits for U.S. Institutional improved during 1999 by 21% and 9%, respectively, over 1998. While U.S. Institutional continued to experience a net loss of assets caused by the shift to index products, the flow from active to passive management declined in the latter part of 1999. U.S. Institutional continued to rank among the largest active-only asset managers in the U.S. Marketing activity for 1999 produced gross sales of $11.3 billion of new business from approximately 100 new clients. INVESCO GLOBAL INVESCO Global's performance in generating new business in 1999 was excellent. INVESCO Global leveraged its infrastructure, resulting in operating profits of L.49.6 million in 1999, an increase of 56% over 1998, and a record operating margin level. Assets under management were $57.2 billion at December 31, 1999, compared to $40.8 billion at the end of 1998. This 40% increase was due to record gross sales of $23.2 billion experienced across the business coupled with the strength in the markets. Assets under management in Continental Europe doubled during 1999. INVESCO Global's net sales in Asia grew over 300% during 1999. INVESCO Global's assets under management in the U.K. and its offshore products also reached record levels during 1999 due to strong investment performance and marketing successes. INVESCO RETIREMENT INVESCO Retirement had strong momentum throughout 1999, generating over $3.3 billion in net new business for various units of AMVESCAP during the year. INVESCO Retirement was responsible for over $23.6 billion in assets under administration, which represented a 57% increase over 1998, and serviced over 421 separate retirement plans with approximately 336,000 plan participants. NEW BUSINESS EXPENSE New business expense contains costs associated primarily with AMVESCAP's efforts in the international defined contribution markets in the U.K., Poland and Hong Kong. Increases in costs over 1999 reflect AMVESCAP's entrance into certain markets in Continental Europe. CORPORATE Corporate expenses include staff costs related to general corporate financial and administrative employees as well as continued expenditures in AMVESCAP-wide initiatives. Increases 23 27 over the prior year related to increases in headcount, necessary as AMVESCAP expands globally, were largely responsible for the increased costs in 2000. TAXATION AMVESCAP's effective tax rate on ordinary profit (before goodwill amortization and exceptional item) was 31.9% for 1999 compared to 32.5% in 1998. This decline was due to the realization of prior year tax losses resulting from a more efficient tax structure relating to the GT Global businesses. LIQUIDITY AND CAPITAL RESOURCES CASH FLOWS AMVESCAP's ability to generate cash from operations in excess of its capital expenditures and dividend requirements is one of its fundamental financial strengths. AMVESCAP's operations continue to be financed from share capital, retained profits and borrowings. AMVESCAP anticipates that operating activities in 2000 will continue to provide sufficient cash flows to meet its financial commitments and to capitalize on opportunities for business expansion. AMVESCAP plans to use the cash from operations remaining after satisfying its business reinvestment needs to reduce debt levels in 2001. AMVESCAP's operations provided (pound sterling) 586.8 million in cash flows in 2000, compared to (pound sterling) 366.0 million in 1999. Financing activities generated (pound sterling) 75.8 million during the year. The majority of this cash flow was used to finance acquisitions in 2000. AMVESCAP generated (pound sterling) 659.7 million of earnings before interest, taxes, depreciation and amortization in 2000, an increase of (pound sterling) 228.6 from 1999. During 2000, AMVESCAP paid (pound sterling) 63.6 million in dividends and (pound sterling) 62.0 million for fixed asset expenditures, principally for technology and capital investments. See "Item 4. Information on the Company - History and Development of AMVESCAP" for further information on AMVESCAP's capital expenditures. Shareholder funds increased to (pound sterling) 2.1 billion at December 31, 2000. AMVESCAP did not change its financial instruments policies in 2000 and did not hedge any of its operational foreign exchange exposures. As a result, AMVESCAP's balance sheet may be impacted by movements in U.S. dollar/sterling exchange rates. This is partially mitigated by AMVESCAP'S U.S. dollar denominated borrowings. Other than this, AMVESCAP does not actively manage its currency exposures. COMPANY BORROWINGS At December 31, 2000, AMVESCAP's total long-term debt amounted to (pound sterling) 960.0 million. Net debt at December 31, 2000, amounted to (pound sterling) 692.6 million (1999: (pound sterling) 512.6 million), excluding cash held as a result of short-term timing differences on customer transactions of (pound sterling) 58.3 million (1999: (pound sterling) 41.5 million). The increase in net debt was due to (pound sterling) 1.3 billion borrowed or issued for acquisitions during the year, reduced by (pound sterling) 1.1 billion in repayments from operating cash flow and conversions of ESDs into Ordinary Shares. During 1998, AMVESCAP issued $650 million of new fixed rate senior debt in the form of 6.375% Senior Exchange Notes due 2003 and 6.600% Senior Exchange Notes due 2005 (the "Notes"). At December 31, 2000, $650.0 million (pound sterling) .444.2 million) of Notes were outstanding. During 1997, AMVESCAP entered into a five year $700 million credit facility with a group of international banks (the "Facility"). At December 31, 2000, (pound sterling) 300.0 ($447.0 million) was drawn under the Facility. A total of (pound sterling) 574.0 million in ESDs and (pound sterling) 128.9 million in Loan Notes were issued in 2000 as part of the consideration for AMVESCAP's acquisitions during 2000. During 2000, (pound sterling) 505.4 million of the ESDs were converted into 45.9 million Exchangeable Shares and (pound sterling) 67.1 million of the ESDs remained 24 28 outstanding at December 31, 2000. The ESDs bear interest at 6% per year and mature in 2003. The Loan Notes mature in 2005 and are callable at the option of the holder on six months notice. A subsidiary of AMVESCAP issued 21.4 million Exchangeable Shares as part of the acquisition of Trimark. These shares are exchangeable into Ordinary Shares on a one-for-one basis at the request of the holder and are the economic equivalent of the Ordinary Shares. Thus, these shares are treated in the balance sheet and earnings per share calculations as though they are Ordinary Shares. Approximately 86.5 million new Ordinary Shares (including the Exchangeable Shares) were issued during 2000 for acquisitions. The existing capital structure of AMVESCAP together with the cash flow from operations and borrowings under the Facility will provide AMVESCAP with sufficient resources to meet present and future cash needs. DIVIDENDS AMVESCAP's Board of Directors has recommended a final dividend of 6.0p per Ordinary Share, resulting in a total dividend of 10.0p in 2000 versus 9.0p in 1999. The total dividend for 2000 represents an increase of 11% over the total dividend for 1999. Under the Companies Act 1985 of Great Britain, as amended (the "Companies Act"), AMVESCAP's ability to declare dividends is restricted to the amount of its distributable profits (the current and retained amounts of AMVESCAP's profit and loss account) on an unconsolidated basis. At December 31, 2000, the amount available for dividends was (pound sterling) 20.5 million after accrual of the recommended final dividend for 2000. Furthermore, the Facility places certain restrictions on AMVESCAP's ability to pay dividends, as described in Note 15 to the Consolidated Financial Statements. These restrictions could impact the ability of AMVESCAP's subsidiaries to pay dividends to AMVESCAP and AMVESCAP's ability to pay dividends to its shareholders. Such restrictions have not had, and are not expected to have in the future, a material effect on AMVESCAP's ability to pay dividends. AMVESCAP believes that its cash flow from operations and credit facilities, and its ability to obtain alternative sources of financing will enable AMVESCAP to meet debt and other obligations as they come due and anticipated future capital requirements. INDUSTRY OUTLOOK The investment management industry has experienced significant growth over the past decade which has been underpinned by two key trends. First, the "baby boom" generation is passing through its prime saving period which is increasing the volume of discretionary savings available for investment. AMVESCAP expects that this period of increase will continue through the next decade. Second, governments around the world have been re-examining the structure of pension plans. As a result of demographic shifts, existing social security and other pension arrangements are projected to be inadequate. Increasingly, governments are implementing reform which moves toward funded defined contribution pension and personal pension plans. These reforms are also increasing the volume of savings available for investment and the momentum of these reforms is expected to increase through the next decade. Accordingly, there continues to be a strong underlying force for the future growth of the investment management industry. Changes in financial market conditions can have an adverse effect on the industry for the reasons summarized under "Item 3. Key Information - Risk Factors". SUMMARY OF DIFFERENCES BETWEEN U.K. GAAP AND U.S. GAAP The financial statements maintained by AMVESCAP in England, its jurisdiction of incorporation, are prepared in accordance with U.K. GAAP, which differs in certain material respects from U.S. GAAP. The principal differences between U.K. GAAP and U.S. GAAP, as applied to AMVESCAP, 25 29 relate to the historical elimination of goodwill and other intangibles against reserves and the related treatment of deferred taxes, shares held by share option trusts and proposed dividend liabilities. See Note 22 to the Consolidated Financial Statements for a reconciliation of operating results from U.K. GAAP to U.S. GAAP. NEW ACCOUNTING STANDARDS Information relating to a new accounting standard for current taxation appears in the notes to the Consolidated Financial Statements. CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS This report includes, and documents incorporated by reference herein and public filings and oral and written statements by AMVESCAP and its management may include, statements which constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of AMVESCAP's management and on information available to management at the time such statements were made. Forward-looking statements include information concerning possible or assumed future results of AMVESCAP's operations, earnings, industry conditions, assets under management, demand and pricing for AMVESCAP's products and other aspects of its business, and statements that are preceded by, followed by, or include the words "believes", "expects", "anticipates", "intends", "plans", "estimates" or similar expressions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although AMVESCAP makes such statements based on assumptions that it believes to be reasonable, there can be no assurance that actual results will not differ materially from AMVESCAP's expectations. Many of the factors that will determine these results are beyond AMVESCAP's ability to control or predict. AMVESCAP does not intend to review or revise any particular forward-looking statements referenced in this Form 20-F in light of future events. Investors are cautioned not to put undue reliance on any forward-looking statements. AMVESCAP hereby identifies the following important factors, and those important factors described elsewhere in this report or in other SEC filings, among others, which could cause its results to differ from any results which might be projected, forecast or estimated by AMVESCAP in any such forward-looking statements: (1) variations in demand for its investment products; (2) significant changes in net cash flows into or out of AMVESCAP's business; (3) significant fluctuations in the performance of debt and equity markets worldwide; (4) the effect of political or social instability in the countries in which AMVESCAP invests or does business; (5) enactment of adverse state, federal or foreign legislation or changes in government policy or regulation (including accounting standards) affecting AMVESCAP's operations; (6) adverse results in litigation; (7) exchange rate fluctuations; (8) the effect of economic conditions and interest rates on a U.K., U.S. or international basis; (9) the ability of AMVESCAP to compete in the investment management business; (10) the effect of consolidation in the investment management business; (11) limitations or restrictions on access to distribution channels for AMVESCAP's products; (12) the ability of AMVESCAP to attract and retain key personnel; (13) the investment performance of AMVESCAP's investment products and the ability of AMVESCAP to retain its accounts; and (14) the ability of AMVESCAP to successfully acquire and integrate other companies into its operations and the extent to which AMVESCAP can realize anticipated cost savings and synergies. 26 30 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES DIRECTORS AND SENIOR MANAGEMENT The directors and senior management of AMVESCAP are:
NAME AGE* POSITION* - ------------------------------ ------- -------------------------------------------------------- Charles W. Brady(a)(c) 65 Executive Chairman, Board of Directors; Director Sir John Banham(b)(c)(d) 60 Non-Executive Director The Hon. Michael D. Benson(a) 57 Vice Chairman, Board of Directors; Director; Chief Executive Officer, INVESCO Global Joseph R. Canion(b)(c)(d) 56 Non-Executive Director Michael J. Cemo(a) 55 Director Gary T. Crum(a) 53 Director; President, A I M Capital Management, Inc. Robert H. Graham(a) 54 Vice Chairman, Board of Directors; Director; Chief Executive Officer, A I M Management Group, Inc. Roberto A. de Guardiola(b)(c)(d) 55 Non-Executive Director Robert C. Hain(a) 47 President and Chief Executive Officer of AIM Funds Management Inc. Hubert L. Harris, Jr.(a) 57 Director; Chief Executive Officer, INVESCO Retirement Bevis Longstreth(b)(c)(d) 67 Non-Executive Director Robert F. McCullough(a) 58 Director; Chief Financial Officer James I. Robertson(a) 43 Chief Executive Officer, AMVESCAP Group Services, Inc. John D. Rogers(a) 39 Chief Executive Officer, U.S. Institutional Stephen K. West(b)(c)(d) 72 Non-Executive Director Alexander M. White(b)(c)(d) 67 Non-Executive Director L. Neil Williams, Jr.(a) 64 General Counsel Mark H. Williamson(a) 49 Chief Executive Officer, Managed Products; Chairman and Chief Executive Officer, INVESCO Funds Group Inc.
- --------------- * All ages and positions are as of February 28, 2001. (a) Member of the Executive Board (b) Member of the Audit Committee (c) Member of the Nomination Committee (d) Member of the Remuneration Committee CHARLES W. BRADY 65 Executive Chairman USA(a)(c) Charles Brady has served as Executive Chairman of the Board of Directors of AMVESCAP since 1993, Chief Executive Officer of AMVESCAP since 1992, and a Director of AMVESCAP since 1986. He was a founding partner of INVESCO Capital Management Inc., which merged with AMVESCAP's predecessor organization in 1988. Mr. Brady began his investment career in 1959 after graduating with a BS from the Georgia Institute of Technology. He also attended the Advanced Management Program at the Harvard Business School. Mr. Brady is a Director of the Atlanta College of Art, a Trustee of the Georgia Tech Foundation and the Carter Library, a Director of the National Bureau of Asian Research, and a member of the Atlanta Society of Financial Analysts. SIR JOHN BANHAM 60 Non-Executive UK(b)(c)(d) Sir John Banham has served as a Director of AMVESCAP since 1999 and is Chairman of the Nomination Committee. He is Chairman of Kingfisher PLC and Whitbread PLC. Sir John was Director General of the Confederation of British Industry from 1987 to 1992, a Director of both National Power and National Westminster Bank from 1992 to 1998, and Chairman of Tarmac PLC from 1994 to March 2000. He also served as Chairman of the Remuneration Committees of both National Power and National Westminster Bank. Sir John is a graduate of Cambridge University and has been awarded honorary doctorates by four leading UK universities. 27 31 THE HON. MICHAEL D. BENSON 57 Vice Chairman and Chief Executive Officer, INVESCO Global UK(a) Michael Benson has served as Vice Chairman of the Board of Directors of AMVESCAP since February 2001, a Director of AMVESCAP since 1994, Chief Executive Officer of INVESCO Global since 1997, and Chief Executive Officer of the Asian region from 1994 to 1997. He began his career with the brokerage firm L. Messel in 1963. He later joined Lazard Brothers Ltd. and became Managing Director of Lazard Securities Ltd., establishing investment offices in Jersey, Guernsey, and Hong Kong. From 1985 to 1992 Mr. Benson established investment offices in London, Boston, Hong Kong, and Singapore for Standard Chartered Bank. In 1992 he joined Capital House Investment Management with responsibility for developing the Far Eastern business. JOSEPH R. CANION 56 Non-Executive USA(b)(c)(d) Joseph Canion has served as a Director of AMVESCAP since 1997 and is Joint Chairman of the Remuneration Committee. He was a Director of AIM from 1991 through 1997, when AIM was merged with a subsidiary of AMVESCAP. Since 1992 Mr. Canion has served as Chairman of Insource Technology Corporation, a business and technology management company based in Houston. He was co-founder and, from 1982 to 1991, Chief Executive Officer, President, and a Director of Compaq Computer Corporation. MICHAEL J. CEMO 55 USA(a) Michael Cemo has served as a Director of AMVESCAP since 1997. He is President of A I M Distributors, Inc., a broker-dealer subsidiary of AIM, and an Executive Vice President of AIM. Mr. Cemo has been in the investment business since 1971 and joined AIM in 1988. He is a member of the Investment Company Institute's sales force marketing committee. Mr. Cemo received a BS from the University of Houston. GARY T. CRUM 53 President, A I M Capital Management, Inc. USA(a) Gary Crum has served as a Director of AMVESCAP since 1997. He is co-founder of AIM and serves as an Executive Vice President of AIM. He is President of A I M Capital Management, Inc., an investment advisory subsidiary of AIM, and is Director of Investments. Mr. Crum has been in the investment business since 1972. He received a BBA from Southern Methodist University and an MBA from the University of Texas at Austin. ROBERT H. GRAHAM 54 Vice Chairman and Chief Executive Officer, AIM USA(a) Robert Graham became Vice Chairman of the Board of Directors of AMVESCAP in February 2001. He has served as a Director of AMVESCAP since 1997 and as Chief Executive Officer of Managed Products from 1997 to January 2001. Mr. Graham is President and Chief Executive Officer of AIM, which he co-founded in 1976. He has been in the investment business since 1972. Mr. Graham received a BS, an MS, and an MBA from the University of Texas at Austin. He has served as a member of the Board of Governors and the Executive Committee of the Investment Company Institute, and as Chairman of the Board of Directors and Executive Committee of the ICI Mutual Insurance Company. ROBERTO A. DE GUARDIOLA 55 Non-Executive USA(b)(c)(d) Roberto de Guardiola has served as a Director of AMVESCAP since 1997. Mr. de Guardiola is President of de Guardiola Advisors, Inc., an investment banking firm based in New York that specializes in the investment management industry. From 1998 to 2000 he served as Managing Director of Putnam, Lovell, de Guardiola & Thornton, an investment banking firm based in New York. Mr. de Guardiola received a BS from the University of Pennsylvania and an MBA from The Wharton School. ROBERT C. HAIN 47 President and Chief Executive Officer of AIM Funds Management Inc. Canada(a) Robert Hain became a member of the Executive Board of AMVESCAP in February 2001. He has served as President and Chief Executive Officer of AIM Funds Management Inc., AMVESCAP's Canadian business, since December 1998. Mr. Hain was Global Head of Private Banking at CIBC from May 1998 to November 1998, a partner at Ernst & Young from 1997 to 1998, an Executive Vice President at Investors Group from 1993 to 1997, and President at Royal Trust (now Royal Bank of Canada) from 1984 to 1993. He received a BA from the University of Toronto and an M.Litt. from Oxford University. 28 32 HUBERT L. HARRIS, JR. 57 Chief Executive Officer, INVESCO Retirement USA(a) Hubert Harris has served as Chief Executive Officer of INVESCO Retirement since January 1998 and as a Director of AMVESCAP from 1993 to February 1997, and since 1998. He served as Assistant Director of the Office of Management and Budget in Washington, DC, during President Carter's administration and as President and Executive Director of the International Association for Financial Planners. Mr. Harris received a BS from the Georgia Institute of Technology and an MBA from Georgia State University. BEVIS LONGSTRETH 67 Non-Executive USA(b)(c)(d) Bevis Longstreth has served as a Director of AMVESCAP since 1993 and is Joint Chairman of the Audit Committee. Mr. Longstreth is retired from Debevoise & Plimpton, based in New York, where he was a partner from 1970 through 1981, and from 1984 through 1997. He was a Commissioner of the SEC from 1981 to 1984. Mr. Longstreth is a frequent writer on issues of corporate governance, banking, and securities law, and is the author of Modern Investment Management and the Prudent Man Rule (1986), a book on law reform. He is a graduate of Princeton University and the Harvard Law School. ROBERT F. MCCULLOUGH 58 Chief Financial Officer USA(a) Robert McCullough has served as a Director and Chief Financial Officer of AMVESCAP since 1996. Before joining AMVESCAP in 1996, he was an accountant at Arthur Andersen in New York from 1964 until 1987. Mr. McCullough became a partner at Arthur Andersen in 1973 and managing partner of the Atlanta office in 1987. He is a graduate of the University of Texas at Austin and is a Certified Public Accountant. Mr. McCullough is a member of the American Institute of Certified Public Accountants and the Georgia Society of Certified Public Accountants. JAMES I. ROBERTSON 43 Chief Executive Officer, AMVESCAP Group Services, Inc. USA(a) James Robertson became Chief Executive Officer of AMVESCAP Group Services, Inc. in February 2001. He has been a member of the Executive Board since March 1999. Mr. Robertson joined AMVESCAP as Director of Finance and Corporate Development for INVESCO Global's European division in 1993 and repeated this role for the Pacific division in 1995. In 1996, he became Managing Director, Global Strategic Planning, of AMVESCAP. Mr. Robertson holds an MA from Cambridge University. JOHN D. ROGERS 39 Chief Executive Officer, U.S. Institutional USA(a) John Rogers became Chief Executive Officer of U.S. Institutional and a member of the Executive Board of AMVESCAP in December 2000. He joined the Company as Chief Investment Officer and President of INVESCO's Tokyo office in 1994 and became Chief Executive Officer and Co-Chief Investment Officer of INVESCO Global Asset Management (N.A.), Inc. in 1997. Mr. Rogers received a BA cum laude from Yale University and an MA from Stanford University. He is a Chartered Financial Analyst and a member of the International Society of Financial Analysts. STEPHEN K. WEST 72 Non-Executive USA(b)(c)(d) Stephen West has served as a Director of AMVESCAP since 1997 and is Joint Chairman of the Audit Committee. Mr. West was a Director of AIM from 1994 through 1997, when AIM was merged with a subsidiary of AMVESCAP. From 1964 to 1998 he was a partner of Sullivan & Cromwell, based in New York, and he is presently of counsel to the firm. Mr. West is a graduate of Yale University and the Harvard Law School. ALEXANDER M. WHITE 67 Non-Executive USA(b)(c)(d) Alexander White has served as a Director of AMVESCAP since 1992 and is Joint Chairman of the Remuneration Committee. Mr. White has spent his entire career in the financial services community. He has been associated with Merrill Lynch, White Weld & Co., and, most recently, James D. Wolfensohn, Inc. where he was a senior investment banker. Mr. White is a graduate of Harvard College and the Harvard Business School. L. NEIL WILLIAMS, JR. 64 General Counsel USA(a) Neil Williams has served as General Counsel of AMVESCAP and has been a member of AMVESCAP's Executive Board since September 1999. Mr. Williams practiced law with the firm of Alston & Bird in Atlanta from 1961 to September 1999. He was Alston & Bird's managing partner from 1984 through 1996. Mr. Williams received an AB and a JD from Duke University. He is a member of the American Law Institute. 29 33 MARK H. WILLIAMSON 49 Chief Executive Officer, Managed Products; Chief Executive Officer, INVESCO Funds Group Inc. USA(a) Mark Williamson became Chief Executive Officer of Managed Products in February 2001 and has been a member of the Executive Board of AMVESCAP since December 1999. He has served as Chairman and Chief Executive Officer of INVESCO Funds Group Inc. since 1998. Mr. Williamson began his career at Merrill Lynch in 1976. He joined C&S Securities in 1985 and was named Managing Director in 1988. He became Chairman and Chief Executive Officer of NationsBank's mutual funds and brokerage subsidiaries in 1997. Mr. Williams graduated from the University of Florida and is a member of the Board of Governors of the Investment Institute and the Board of Directors of ICI Mutual Insurance Company. COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT Messrs. Hain, Robertson, Rogers, Williams and Williamson are referred to in this Form 20-F as senior management of AMVESCAP because they are members of the Executive Board of AMVESCAP. The other members of the Executive Board of AMVESCAP serve also as directors of AMVESCAP and are not included in references to senior management. 30 34 SALARY, BONUS AND OTHER BENEFITS The remuneration of the executive chairman, directors and senior management of AMVESCAP is set forth in the following table:
SALARY BONUS(1) BENEFITS TOTAL 2000 1999 2000 1999 2000 1999 2000 1999 ------- ------- ------- ------- ------- ------- ------- ------- (pound (pound (pound (pound (pound (pound (pound (pound sterling) sterling) sterling) sterling) sterling) sterling) sterling) sterling) 000 000 000 000 000 000 000 000 EXECUTIVE CHAIRMAN: Charles W. Brady 377 350 5,795 3,446 3 9 6,175 3,805 EXECUTIVE DIRECTORS: Charles T. Bauer(2) 299 278 828 940 3 4 1,130 1,222 The Hon. Michael D. Benson 272 245 1,821 1,065 1 1 2,094 1,311 Michael J. Cemo(3) 183 170 2,662 1,916 3 3 2,848 2,089 Gary T. Crum 266 248 1,490 1,065 3 4 1,759 1,317 A.D. Frazier, Jr. (2) 274 255 1,291 1,065 3 5 1,568 1,325 Robert H. Graham 333 309 2,483 1,804 3 4 2,819 2,117 Hubert L. Harris, Jr 293 273 1,159 752 3 6 1,455 1,031 Robert F. McCullough 274 255 1,358 814 3 2 1,635 1,071 NON-EXECUTIVE DIRECTORS: Sir John Banham 67 53 -- -- -- -- 67 53 Joseph R. Canion(4) 67 56 -- -- -- -- 67 56 Roberto A. de Guardiola(4) 67 25 -- -- -- -- 67 25 Bevis Longstreth(4) 67 25 -- -- -- -- 67 25 Stephen K. West 67 56 -- -- -- -- 67 56 Alexander M. White 67 56 -- -- -- -- 67 56 TOTAL REMUNERATION OF SENIOR MANAGEMENT AS A GROUP (FOUR PERSONS)(5) 989 866 4,503 1,911 12 14 5,504 2,811 ------- ------- ------- ------- ------- ------- ------- ------- 3,962 3,520 23,390 14,778 37 52 27,389 18,370 ======= ======= ======= ======= ======= ======= ======= =======
- ---------- (1) 2000 bonus for each executive director and member of senior management includes (pound sterling) 172,605 paid into the AMVESCAP Global Stock Plan. 20% of the 1999 bonus of each executive director and member of senior management was paid into the AMVESCAP Global Stock Plan. These sums are used to purchase Ordinary Shares on the open market. The shares purchased are then held in trust under the rules of the AMVESCAP Global Stock Plan which normally provide for shares to vest beneficially after a period of three year. (2) Mr. Bauer resigned as director and Vice Chairman of AMVESCAP on December 31, 2000, and Mr. Frazier resigned as director of AMVESCAP on February 28, 2001. (3) Bonus amounts include commissions earned pursuant to approved commission schedules. (4) 2000 compensation amounts for Messrs. Canion, de Guardiola and Longstreth include compensation deferred pursuant to the AMVESCAP Deferred Fees Share Plan. Each of Messrs. de Guardiola and Longstreth deferred (pound sterling) 31,324 from their 1999 compensation pursuant to the AMVESCAP Deferred Fees Share Plan. (5) Compensation information for one member of senior management is not included in this table because he became a member of the Executive Board of AMVESCAP in 2001. 31 35 PENSION RIGHTS The directors and senior management participate in a defined contribution pension scheme. Contributions made in respect of directors' and senior management's pensions arrangements in 2000 were as follows:
(pound sterling) 000 ----- Charles W. Brady 16 Charles T. Bauer(1) 16 The Hon. Michael D. Benson 32 Michael J. Cemo 11 Gary T. Crum 16 A.D. Frazier, Jr.(1) 15 Robert H. Graham 16 Hubert L. Harris, Jr. 16 Robert F. McCullough 16 Total contributions made for senior management as a group (four persons)(2) 59
- ---------- (1) Mr. Bauer resigned as director and Vice Chairman of AMVESCAP on December 31, 2000, and Mr. Frazier resigned as director of AMVESCAP on February 28, 2001. (2) Information for one member of senior management is not included in this table because he became a member of the Executive Board of AMVESCAP in 2001. AMVESCAP GLOBAL STOCK PLAN AMVESCAP has established the AMVESCAP Global Stock Plan, which is a remuneration plan for key employees ("Global Partners") under which a portion of a profit-linked bonus paid annually in respect of each Global Partner is deposited into a discretionary employee benefit trust which then purchases Ordinary Shares in the open market. The plan trustee is Bank of Bermuda New York Limited. The Ordinary Shares purchased by the trust are allocated within the trust to participants and, provided they retain their position with AMVESCAP for a period of three years from the date of the bonus, such allocated shares will be transferred to the participants upon their retirement or termination of employment with AMVESCAP. Approximately (pound sterling) 29.7 million was paid into the AMVESCAP Global Stock Plan for the year ended December 31, 2000. The AMVESCAP Global Stock Plan owned approximately 11.0 million Ordinary Shares on February 28, 2001. On such date, the executive directors and senior management had interests in the Ordinary Shares held by the AMVESCAP Global Stock Plan as set forth in the following table: AMVESCAP GLOBAL STOCK PLAN
NAME VESTED INTERESTS UNVESTED INTERESTS ---- ---------------- ------------------ Charles W. Brady 408,090 234,489 Charles T. Bauer(1) 155,439 -- The Hon. Michael D. Benson 28,027 76,588 Michael J. Cemo 32,686 59,410 Gary T. Crum 44,572 76,647 A.D. Frazier, Jr. (1) 42,537 76,638 Robert H. Graham 74,287 150,459 Hubert L. Harris, Jr. 117,330 54,733 Robert F. McCullough 66,548 62,258 Total interests of senior management (four persons)(2) 82,068 122,871
- ---------- (1) Mr. Bauer resigned as director and Vice Chairman of AMVESCAP on December 31, 2000, and Mr. Frazier resigned as director of AMVESCAP on February 28, 2001. (2) Information for one member of senior management is not included in this table because he became a member of the Executive Board of AMVESCAP in 2001. 32 36 INVESCO EMPLOYEE STOCK OWNERSHIP PLAN The INVESCO Employee Stock Ownership Plan (the "ESOP") was established for employees of certain U.S. subsidiaries of AMVESCAP. Participating AMVESCAP subsidiaries make stock bonus contributions to the ESOP comprising cash and/or AMVESCAP securities in respect of their employees who participate in the ESOP. Accounts are established in respect of each participant's allocation of contributions to the ESOP, which are held by the trustee in accordance with the terms of the ESOP. Certain members of the Board or senior management participate in the ESOP. AMVESCAP EXECUTIVE SHARE OPTION SCHEMES Executive directors of AMVESCAP and qualifying employees of AMVESCAP and its participating subsidiaries are eligible to be nominated for participation in various AMVESCAP option plans (the "AMVESCAP Executive Share Option Schemes"). Options under the AMVESCAP Executive Share Option Schemes entitle the holder to acquire Ordinary Shares at a certain price. The AMVESCAP Executive Share Option Schemes contain limits upon the participation by each individual. OPTIONS TO PURCHASE SECURITIES FROM AMVESCAP All outstanding options of AMVESCAP have been issued under the AMVESCAP Executive Share Option Schemes and various AIM option plans. The table below is a summary of outstanding options to acquire Ordinary Shares held by directors and senior management of AMVESCAP as of February 28, 2001:
OPTION NAME NUMBER OF SHARES EXERCISE PRICE EXPIRATION DATE ---- ---------------- -------------- --------------- Charles W. Brady 124,027 160.0p January 2002 500,000 244.0p November 2003 100,000 422.5p November 2004 250,000 432.0p December 2008 500,000 660.0p December 2009 200,000 1100.0p December 2010 The Hon. Michael D. Benson 400,000 244.0p November 2003 100,000 422.5p November 2004 200,000 432.0p December 2008 200,000 660.0p December 2009 100,000 1100.0p December 2010 Michael J. Cemo 100,000 422.5p November 2004 100,000 432.0p December 2008 200,000 660.0p December 2009 100,000 1100.0p December 2010 Gary T. Crum 100,000 422.5p November 2004 100,000 432.0p December 2008 150,000 660.0p December 2009 100,000 1100.0p December 2010 A.D. Frazier, Jr.(1) 200,000 432.0p December 2008 200,000 660.0p December 2009 100,000 1100.0p December 2010 Robert H. Graham 100,000 422.5p November 2004 200,000 432.0p December 2008 250,000 660.0p December 2009 100,000 1100.0p December 2010
33 37
OPTION NAME NUMBER OF SHARES EXERCISE PRICE EXPIRATION DATE ---- ---------------- -------------- --------------- Hubert L. Harris, Jr. 25,000 242.0p December 2002 200,000 242.0p April 2003 400,000 244.0p November 2003 100,000 422.5p November 2004 100,000 432.0p December 2008 150,000 660.0p December 2009 100,000 1100.0p December 2010 Robert C. Hain 133,735 452.0p December 2008 75,000 660.0p December 2009 100,000 1100.0p December 2010 Robert F. McCullough 200,000 242.0p April 2003 400,000 244.0p November 2003 100,000 422.5p November 2004 100,000 432.0p December 2008 150,000 660.0p December 2009 100,000 1100.0p December 2010 James I. Robertson 400,000 244.0p November 2003 50,000 422.5p November 2004 75,000 416.0p October 2008 150,000 660.0p December 2009 100,000 1,100.0p December 2010 John D. Rogers 29,128 160.0p October 2002 300,000 244.0p November 2003 50,000 422.5p November 2004 25,000 416.0p October 2008 25,000 660.0p December 2009 100,000 1,100.0p December 2010 L. Neil Williams, Jr. 126,800 480.0p September 2009 100,000 1,100.0p December 2010 Mark H. Williamson 100,000 416.0p October 2008 100,000 660.0p December 2009 100,000 1,100.0p December 2010 Stephen K. West 211,972 (pound sterling) 0.25 December 2003
(1) Mr. Frazier resigned as director of AMVESCAP on February 28, 2001. BOARD PRACTICES Non-executive Directors. Non-executive directors do not have formal fixed term contracts; however, under AMVESCAP's Articles of Association all directors are required to retire by rotation, and one third of AMVESCAP's Board of Directors (the "Board") is required to seek re-election each year. Re-election is subject to shareholders' approval. Although non-executive directors may serve on the Board beyond their 70th birthday, any director (whether executive or non-executive) over the age of 70 years who is seeking re-election will be required to do so on an annual basis. Executive Directors. Executive directors are employed under continuing contracts of employment that can be terminated by either party under notice provisions of up to a maximum of twelve months. Executive directors' compensation arrangements are determined by the Remuneration Committee which consists solely of non-executive directors. Executive Board. The Board has appointed an Executive Board to oversee and supervise the business and strategy of the executive management of AMVESCAP as a whole and to approve and coordinate the activities of management committees for AMVESCAP's four operating groups. As of 34 38 February 28, 2001, the Executive Board consisted of Messrs. Benson, Brady, Cemo, Crum, Graham, Hain, Harris, McCullough, Robertson, Rogers, Williams and Williamson. Membership of the Executive Board may vary with the approval and consent of the Board. Members of the Executive Board serve until they resign from the Executive Board or the Board decides to change the membership of the Executive Board. Remuneration Committee. The Remuneration Committee of AMVESCAP's Board of Directors (the "Committee"), which consists of Sir John Banham and Messrs. Canion, de Guardiola, Longstreth, West and White, each of whom is a non-executive director, determines the remuneration of the Executive Chairman and the executive directors and the allocation of share options and the sums available for distribution in respect of a bonus paid annually to each Global Partner. The remuneration of the non-executive directors is determined by AMVESCAP's Board of Directors as a whole. The Committee in framing its remuneration policy is in compliance with the Best Practice Provisions of the Combined Code annexed to the Listing Rules of the LSE. The Committee meets no less than twice per year. In determining the individual compensation packages of the Executive Chairman and the executive directors, the Committee gives full consideration to the Best Practice Provisions, consults with the Chairman and has access to professional advice from outside AMVESCAP. During 2000, a firm of remuneration consultants was engaged to review executive compensation as it related to a peer group of comparable companies and the industry in general. The Committee was aware that compensation levels vary between the countries in which AMVESCAP operates and that the geographic mobility of executives and senior professionals necessitated that these factors be taken into account in determining appropriate remuneration levels. In determining the sums available for the payment of incentives through the AMVESCAP Global Stock Plan, the Committee considers the Best Practice Provisions and takes into account the returns provided to AMVESCAP's shareholders and AMVESCAP's performance. In determining an individual's compensation, the Committee considers the individual's performance measured against, among other factors, the achievement of personal and Board of Directors' objectives and targets being in place. Audit Committee. The Audit Committee is responsible for reviewing and implementing accounting and financial policies and controls, ensuring that internal and external auditing processes are properly coordinated and work effectively, reviewing the scope and results of the audit and its cost effectiveness, and confirming the independence of the auditors. In this connection, the Audit Committee also reviews the extent and scope of non-audit work supplied by the auditors. The Audit Committee also reviews the expenses of the Executive Board. The Audit Committee consists of Sir John Banham and Messrs. Canion, de Guardiola, Longstreth, West and White, each of whom is a non-executive director. Direct access to the Audit Committee is afforded to AMVESCAP's auditors. The Audit Committee receives periodic reports on matters related to internal controls and procedures from executives within AMVESCAP and from AMVESCAP's Compliance Officer on the adequacy of compliance arrangements and related matters. Nomination Committee. The Nomination Committee consists of all of the non-executive directors and the Executive Chairman. The Nomination Committee is responsible for the structure and composition of the Board. When the Board identifies a need for Board appointments, the Nomination Committee will carry out a formal selection process for candidates and then make recommendations regarding appointments, whether of executive or non-executive directors. EMPLOYEES As of December 31, 2000, AMVESCAP employed 8,259 people, of which approximately 72% were located in North America. As of December 31, 1999, AMVESCAP employed 5,545 people. 35 39 The increase in headcount during 2000 was due to acquisitions by AMVESCAP during 2000 and due to increases in the volume of AMVESCAP's business. SHARE OWNERSHIP The following table discloses, as of February 28, 2001, holdings of Ordinary Shares by directors and senior management of AMVESCAP:
PERCENT OF ORDINARY SHARES(1) OUTSTANDING ORDINARY SHARES ------------------ --------------------------- Charles W. Brady(2) 4,648,507 * Charles T. Bauer (2) (3) (5) 40,755,820 5.26% Sir John Banham 7,000 * The Hon. Michael D. Benson(2) 71,947 * Joseph R. Canion(11) 72,394 * Michael J. Cemo(2) (4) (7) 7,241,389 * Gary T. Crum(2) (4) (8) 33,245,679 4.29% A.D. Frazier, Jr.(2) (3) 1,815 * Robert H. Graham(2) (4) (9) 30,703,221 3.96% Roberto A. de Guardiola(6) (11) 2,570,886 * Robert C. Hain(2) -- * Hubert L. Harris, Jr.(2) 111,200 * Bevis Longstreth(10) (11) 70,440 * Robert F. McCullough(2) 13,815 * James I. Robertson(2) 6,000 * John D. Rogers(2) -- * Stephen K. West 47,461 * Alexander M. White 120,000 * L. Neil Williams, Jr. (2) -- * Mark H. Williamson(2) -- * Total Ordinary Shares owned by current directors and senior management of AMVESCAP as a group (19 individuals) 119,687,574 15.45%
- ---------- * Less than 1% (1) Ordinary Shares include shares held as ADSs. Does not include options to purchase Ordinary Shares held by such individuals. For information regarding ownership of stock options, see "- Options to Purchase Securities from AMVESCAP" above. (2) Excludes (a) interests of Messrs. Brady, Bauer, Benson, Cemo, Crum, Frazier, Graham, Hain, Harris, McCullough, Robertson, Rogers, Williams and Williamson in the 11.0 million Ordinary Shares held by the trustees of the AMVESCAP Global Stock Plan, of which such officers may be deemed to be discretionary beneficiaries by virtue of their participation in such plan (see "Item 6. Compensation of Directors and Senior Management -- AMVESCAP Global Stock Plan") and the 16.6 million Ordinary Shares held by the trustees of the AMVESCAP Executive Share Option Schemes, of which such officers may be deemed to be discretionary beneficiaries by virtue of their participation in such schemes (see "Item 6. Options to Purchase Securities from AMVESCAP") and (b) interests of Messrs. Brady, Frazier, Harris, McCullough, Robertson, Rogers and Williamson in the 11.3 million Ordinary Shares held by the trustees of The INVESCO ESOP, in which such officers may be deemed to be interested by virtue of their participation in such plan. (3) Mr. Bauer resigned as director and Vice Chairman of AMVESCAP on December 31, 2000, and Mr. Frazier resigned as director of AMVESCAP on February 28, 2001. (4) Shares issued to Messrs. Cemo, Crum and Graham in connection with the AIM Merger are subject to certain restrictions on transfer pursuant to a transfer restriction agreement (the "Transfer Restriction Agreement") effective as of February 28, 1997 (the "Effective Time"). With certain exceptions, Messrs. Cemo, Crum and Graham may not transfer Ordinary Shares held as of the Effective Time (or arising from options held at the Effective Time) except pursuant to a schedule permitting transfers of 20% 36 40 of Ordinary Shares held at the Effective Time during 2001. Ordinary Shares released from restriction in prior periods may also be transferred during 2001. Under the Transfer Restriction Agreement, AMVESCAP has a right of first refusal to purchase Ordinary Shares proposed to be sold by Messrs. Cemo, Crum and Graham. Additionally, Messrs Cemo, Crum and Graham may not transfer more than 2.5% of AMVESCAP's voting shares, either individually or together with other shareholders as part of a "group" (within the meaning of the Securities Act of 1933, as amended) or "concert party", within the meaning of the City Code on Takeovers and Mergers. The Transfer Restriction Agreement terminates in October 2001. This discussion is not complete and should be read in conjunction with the Transfer Restriction Agreement, which is filed as an exhibit to this Form 20-F. (5) Includes (a) 1,721,610 Ordinary Shares owned by Mr. Bauer's wife, as to which Mr. Bauer disclaims beneficial ownership, (b) 682,246 Ordinary Shares owned by a trust of which Mr. Bauer's wife serves as co-trustee and (c) 558,300 Ordinary Shares owned by a non-profit corporation of which Mr. Bauer serves as president. (6) Mr. de Guardiola's share interest arises as a result of his being a discretionary beneficiary of a trust which is the owner of Harley Services Limited, the owner of the Ordinary Shares. (7) Includes 400,000 Ordinary Shares owned by a non-profit corporation of which Mr. Cemo serves as an executive officer. (8) Includes (a) 350,000 Ordinary Shares owned by a non-profit corporation of which Mr. Crum serves as president, (b) 7,567,809 Ordinary Shares owned by a limited partnership with a limited liability corporation as its general partner of which Mr. Crum serves as chief executive officer, (c) 203,392 Ordinary Shares, 562,032 Ordinary Shares and 2,270,580 Ordinary Shares owned, respectively, by three trusts of which Mr. Crum is trustee, as to which Mr. Crum disclaims beneficial ownership and (d) 682,246 Ordinary Shares owned by a trust of which Mr. Crum is co-trustee with Mr. Bauer's wife, as to which Mr. Crum disclaims beneficial ownership. (9) Includes (a) 6,661 Ordinary Shares owned by Mr. Graham's wife, (b) 30,368,653 Ordinary Shares owned by a limited partnership of which Mr. Graham is the managing general partner and (c) 142,620 Ordinary Shares owned by a limited partnership with a trust as its general partner of which Mr. Graham serves as trustee. (10) Represents shares held by a limited partnership of which Mr. Longstreth is a general partner. (11) Excludes interests in 5,557, 13,156 and 13,156 Ordinary Shares held by Messrs. Canion, Longstreth and de Guardiola, respectively, pursuant to the AMVESCAP Deferred Fees Share Plan. Pursuant to the terms of the AIM Standstill Agreement (defined below) entered into in connection with the AIM Merger, certain former shareholders of AIM and their spouses and certain current directors of AMVESCAP have agreed not to take certain actions that might lead to a change in control of AMVESCAP without the consent of at least two-thirds of all the members of AMVESCAP's Board of Directors. The standstill agreement will terminate on or before February 28, 2002. The foregoing summary is not complete and should be read in conjunction with, the AIM Standstill Agreement, which is filed as an exhibit to this Form 20-F. Employee Ownership Opportunities. AMVESCAP operates various Sharesave option plans that allow employees to set aside part of their salary each month as savings for the exercise of options to purchase AMVESCAP stock at the end of the option period. Additionally, certain AMVESCAP employees receive options to purchase Ordinary Shares pursuant to the ESOP, AMVESCAP Executive Share Option Schemes and the Wholesale Representatives Deferral Plan. ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS MAJOR SHAREHOLDERS The following table discloses, as of February 28, 2001, holdings of Ordinary Shares by owners of 5% or more of AMVESCAP's Ordinary Shares:
PERCENT OF ORDINARY SHARES (1) OUTSTANDING ORDINARY SHARES ------------------- --------------------------- Charles T. Bauer 40,755,820 5.26%
(1) Ordinary Shares include shares held as ADSs. Mr. Bauer's holdings of Ordinary Shares decreased during the period from January 1, 1998 through December 31, 2000 as a result of sales and charitable gifts. As of February 28, 2001, Mr. Bauer was the only owner of more than 5% of AMVESCAP's Ordinary Shares known to AMVESCAP. Mr. Bauer does not have different voting rights from owners of less than 5% of AMVESCAP's Ordinary Shares. 37 41 A total of 774,541,923 shares were issued and outstanding on February 28, 2001, of which 138,109,810 Ordinary Shares were held of record by holders in the U.S. (excluding shares held in ADR form) and 20,353,354 Ordinary Shares were represented by ADSs evidenced by ADRs issued by the Depositary. On February 28, 2001, the number of holders of record of the Ordinary Shares was 15,827, the number of holders of record of Ordinary Shares in the U.S. was 325 and the number of registered holders of the ADSs was 57. Because certain of these Ordinary Shares and ADSs were held by brokers or other nominees, the number of holders of record or registered holders in the U.S. is not representative of the number of beneficial holders or of the residence of the beneficial holders. AMVESCAP is not directly or indirectly owned or controlled by any other corporations or by any foreign government. AMVESCAP is not aware of any arrangement, the operation of which might result in a change in the control of AMVESCAP. RELATED PARTY TRANSACTIONS Mr. de Guardiola is President of de Guardiola Advisors, Inc. which provides investment banking services to AMVESCAP from time to time. In 2000, de Guardiola Advisors, Inc.'s total fees for services provided to AMVESCAP amounted to (pound sterling) 3,867,000. De Guardiola Advisors, Inc. will also receive fees for investment banking services provided to AMVESCAP in connection with its acquisition of National Asset Management Corporation and, if consummated, AMVESCAP's proposed acquisition of Pell Rudman. AMVESCAP believes that the fees paid and to be paid by AMVESCAP are customary and reasonable for the services provided by de Guardiola Advisors, Inc. ITEM 8. FINANCIAL INFORMATION See "Item 17. Financial Statements". LEGAL PROCEEDINGS In the normal course of business, AMVESCAP is subject to various legal proceedings; however, in management's opinion, there are no legal proceedings pending against AMVESCAP or any of its subsidiaries that would have a material adverse effect on the consolidated financial position, results of operations, or liquidity of AMVESCAP. DISTRIBUTIONS See "Item 3. Key Information - Dividends" and "Item 10. Additional Information". CHANGES IN FINANCIAL INFORMATION No significant change in AMVESCAP's financial information has occurred since the date of AMVESCAP's annual financial statements included in this Form 20-F. ITEM 9. THE OFFER AND LISTING NATURE OF TRADING MARKET The following table sets forth, for the periods indicated, the high and low reported sale prices for the Ordinary Shares on the LSE, based on its Daily Price Official List, and the high and low reported sale prices for the ADSs on the NYSE at the closing of each trading day. The Ordinary Shares are listed on the LSE and the SBF-Paris Bourse, and are reported under the symbol "AVZ". The ADSs are listed and traded on the NYSE under the symbol "AVZ". Each ADS represents two Ordinary Shares. 38 42
ORDINARY SHARES ADSS(1) ----------------------- --------------------- HIGH LOW HIGH LOW --------- --------- ------ ------ April 2001 1,310.00p 980.00p $37.50 $28.07 March 2001 1,325.00p 863.00p $38.89 $24.52 February 2001 1,531.00p 1,284.00p $45.28 $37.27 January 2001 1,590.00p 1,306.00p $46.49 $39.29 December 2000 1,515.00p 1,150.00p $44.15 $33.44 November 2000 1,734.00p 1,100.00p $49.50 $31.30
ORDINARY SHARES ADSS(1) ----------------------- --------------------- HIGH LOW HIGH LOW --------- --------- ------ ------ First Quarter 2001 1,590.00p 863.00p $46.49 $24.52 Fourth Quarter 2000 1,734.00p 1,100.00p $49.50 $31.30 Third Quarter 2000 1,500.00p 1,037.00p $43.82 $31.27 Second Quarter 2000 1,060.00p 728.50p $32.14 $23.09 First Quarter 2000 887.00p 642.00p $27.89 $21.03 Fourth Quarter 1999 288.40p 173.80p $23.35 $14.41 Third Quarter 1999 261.80p 188.40p $20.38 $15.42 Second Quarter 1999 277.80p 211.80p $22.46 $16.82 First Quarter 1999 258.60p 186.50p $21.16 $15.51
ORDINARY SHARES ADSS(1) ----------------------- --------------------- HIGH LOW HIGH LOW --------- --------- ------ ------ 2000 1,734.00p 642.00p $49.50 $21.03 1999 721.00p 434.50p $23.35 $14.41 1998 743.00p 263.00p $24.90 $ 8.62 1997 525.50p 251.50p $17.25 $ 8.73 1996 274.09p 209.43p $ 8.55 $ 6.53
(1) ADS prices have been adjusted to reflect the change in the Ordinary Share per ADS ratio to one ADS per two Ordinary Shares effected on November 8, 2000 and the previous change in the Ordinary Share per ADS ratio to one ADS per five Ordinary Shares effected in April 1998. ITEM 10. ADDITIONAL INFORMATION MEMORANDUM AND ARTICLES OF ASSOCIATION The Memorandum of Association of AMVESCAP provides that AMVESCAP's principal objects are, among other things, to carry on the business of an investment holding company and to subscribe for, purchase or otherwise acquire and hold shares, debentures or other securities of any other company or body corporate and to acquire and undertake the whole or any part of the business, property and liabilities of any company or body corporate carrying on any business and to sell or deal in or otherwise dispose of any shares, debentures or other securities or property including any business or undertaking of any other company or any other assets or liabilities. The objects of AMVESCAP are set out in full in clause 4 of AMVESCAP's Memorandum of Association. AMVESCAP's Memorandum of Association, all material agreements discussed in this Form 20-F and all documents filed as exhibits to this Form 20-F are available for inspection at AMVESCAP's registered office at 11 Devonshire Square, London, EC2M 4YR. The following discussion of AMVESCAP's Articles of Association is not complete and should be read in conjunction with the Articles of Association, which are filed as an exhibit to this Form 20-F. The Articles of Association of AMVESCAP contain, among other things, provisions to the following effect: DIRECTORS At every annual general meeting one third of the directors will retire from office, but will be eligible for re-election. AMVESCAP calculates the directors' retirement schedules prior to each annual 39 43 general meeting based on director retirements during the past 12 months and the date each director was last elected. Other than as provided below, a director cannot vote in respect of any arrangement in which he has any material interest other than by virtue of his interest in securities of AMVESCAP. A director will not be counted in the quorum at the meeting in relation to the resolution on which he is not permitted to vote. A director can vote on resolutions concerning (i) debt obligations incurred by him for AMVESCAP, (ii) securities offerings in which he is interested as an underwriting participant, (iii) proposals relating to a company in which he is interested provided he beneficially owns less than 1% of such company, (iv) proposals relating to certain retirement benefit plans and certain employee share participation plans and (v) the purchase and maintenance of insurance. A director cannot vote or be counted in the quorum on any resolution regarding his appointment as an office-holder including fixing or varying the terms of his appointment or termination. Directors are not required to hold shares of AMVESCAP as a qualification for office. RIGHTS ATTACHING TO AMVESCAP SHARES Subject to the provisions of the U.K. Act, the Board may determine when to hold the annual general meeting, and may call extraordinary meetings when it thinks appropriate. Extraordinary meetings may also be convened by requisitionists. Unless the Board otherwise determines, a shareholder may not be present or vote at a meeting in respect of his shares of AMVESCAP, and will not be counted in the quorum for such meeting, if he owes any amount to AMVESCAP for the purchase of his shares. If a shareholder does not comply within the specified time period with a request made by AMVESCAP under section 212 of the U.K. Act to disclose the nature of his interest in shares of AMVESCAP, the directors may suspend the shareholder's right to attend meetings or vote his shares. Subject to any special voting rights, and if all shares owned have been fully paid for, every shareholder (or shareholder on a poll) who is present in person or by proxy has one vote for every four Ordinary Shares. On a poll, every shareholder who is present in person or by proxy has one vote for every (pound sterling)1 in the aggregate paid up in respect of the nominal amount of Ordinary Shares. The special voting share, par value 25 pence (the "Special Voting Share"), has one vote in addition to any votes that may be cast by holders of Exchangeable Shares (other than AMVESCAP). On a poll, the holder of the Special Voting Share has one vote for every four Exchangeable Shares that have been voted by holders of such Exchangeable Shares (other than AMVESCAP). A holder of Exchangeable Shares other than AMVESCAP can instruct the holder of the Special Voting Share to appoint that person as proxy to attend meetings on behalf of his own interests in the Exchangeable Shares. The special rights and privileges of shareholders may be changed upon shareholder vote, but will not be affected by the issuance of additional shares of the same class. AMVESCAP may not issue any special voting shares in addition to the Special Voting Share without the approval of the holder of such share. When no Exchangeable Shares are outstanding (other than those held by AMVESCAP) and no ESDs are outstanding, the Special Voting Share will automatically be redeemed and cancelled. Otherwise, the Special Voting Share is not subject to redemption by AMVESCAP or by the holder of such share. DIVIDENDS AND ENTITLEMENT IN THE EVENT OF LIQUIDATION TO ANY SURPLUS The Board may pay shareholders such annual and interim dividends as appear to be justified by AMVESCAP profits. Before recommending dividends, the Board can set aside sums as a reserve for special purposes. The Board can deduct from any dividend payable to any shareholder sums payable by him to AMVESCAP. The dividend payable by AMVESCAP will not bear interest. If dividends remain unclaimed for one year after being declared AMVESCAP can utilize the dividend money until claimed. All dividends unclaimed for a period of 12 years after having been declared will be forfeited and revert to 40 44 AMVESCAP. Every dividend shall be paid to shareholders of record on the record date. The Special Voting Share does not carry any right to receive dividends or distributions. On a winding up of AMVESCAP, the liquidator may, with the approval of the contributories, divide the assets of AMVESCAP among the contributories, setting such value as he deems fair on any property to be divided, provided that the holder of the Special Voting Share must receive 25 pence before any distribution is made on the Ordinary Shares. After payment of such amount, the holder of the Special Voting Share is not entitled to participate in any further distribution of AMVESCAP assets. MATERIAL CONTRACTS The contracts described below (not being contracts entered into in the ordinary course of business) have been entered into by AMVESCAP and/or its subsidiaries since January 1, 1999 and, as at the date of this document, contain provisions under which AMVESCAP or one or more of its subsidiaries has an obligation or entitlement which is or may be material to AMVESCAP. This discussion is not complete and should be read in conjunction with the agreements described below, each of which is filed as an exhibit to this Form 20-F. (i) Agreements relating to the acquisition of Trimark: (a) Amended and Restated Merger Agreement, dated as of May 9, 2000, between AMVESCAP and Trimark (the "Trimark Merger Agreement") - The Trimark Merger Agreement specifies the terms of the Trimark merger. It provides that Trimark shareholders can elect (subject to certain limitations) to receive Exchangeable Shares, Ordinary Shares, ESDs or cash or a combination thereof in exchange for their Trimark shares. The Trimark Merger Agreement also provides that options to purchase Trimark shares not exercised before a certain date will become options to purchase Ordinary Shares equal to an exchange ratio multiplied by the number of Trimark shares subject to such options. (b) Support Agreement, dated as of August 1, 2000, between AMVESCAP, AVZ Callco Inc. and AMVESCAP Inc. (the "Trimark Support Agreement") - Pursuant to the Trimark Support Agreement, AMVESCAP agrees to ensure that the subsidiaries of AMVESCAP involved in the issuance of Exchangeable Shares can satisfy their respective obligations in respect of the Exchangeable Shares. The Trimark Support Agreement provides that so long as any Exchangeable Shares not owned by AMVESCAP or its affiliates are outstanding, AMVESCAP cannot declare or pay any dividend unless the issuer of the Exchangeable Shares, AMVESCAP Inc. ("Exchangeco") on the same day declares and pays an equivalent dividend to holders of Exchangeable Shares. If there is a shortfall in Exchangeco's reserves on any dividend declaration date, AMVESCAP is required to fund this shortfall to the extent necessary to pay an economically equivalent dividend. If AMVESCAP is subject to a takeover offer, it must use all reasonable efforts to enable the holders of the Exchangeable Shares to participate on economically equivalent terms. Further the Trimark Support Agreement contains an anti-dilution covenant on the part of AMVESCAP which prevents AMVESCAP from issuing Ordinary Shares, convertible shares or options to AMVESCAP shareholders; distributing property to AMVESCAP shareholders, or altering its share capital structure, in each case without either (a) the approval of the holders of the Exchangeable Shares or (b) economically equivalent arrangements being put in place in favor of the holders of the Exchangeable Shares. (c) Voting and Exchange Trust Agreement, dated as of August 1, 2000, between AMVESCAP, AMVESCAP Inc. and CIBC Mellon Trust Company (the "Trimark Voting and Exchange Trust Agreement") - Under the Trimark Voting Trust Agreement, a special voting share is issued to CIBC Mellon Trust Company, the trustee, and a trust is created for the benefit of the holders of the Exchangeable 41 45 Shares (other than AMVESCAP and its affiliates). The trustee can vote in person or by proxy on any matters put before the AMVESCAP shareholders at an AMVESCAP general meeting. Each holder of Exchangeable Shares is entitled to instruct the trustee to vote at any meeting at which holders of Ordinary Shares are entitled to vote or to attend the meeting personally and vote directly. Unless instructed, the trustee may not vote, and any Exchangeable Shares held by AMVESCAP or its affiliates may not be voted. The trustee holds automatic exchange rights in trust for the benefit of the holders of the Exchangeable Shares (other than AMVESCAP and its affiliates) which provide that, in the event of insolvency or liquidation of Exchangeco or of AMVESCAP, AMVESCAP will purchase each Exchangeable Share held by such holders in return for one Ordinary Share plus any accrued and unpaid dividends thereon. AMVESCAP provides to the trustee all documents to be sent to AMVESCAP shareholders (including proxies and forms of direction that are subject to the right of reasonable comment by the trustee if reasonably practicable) prior to mailing. The trustee is required, at AMVESCAP's expense, to mail all such documents to the holders of the Exchangeable Shares, whenever practicable at the same time as they are mailed to the AMVESCAP shareholders. (d) Indenture dated August 1, 2000 among Exchangeco, AMVESCAP and CIBC Mellon Trust Company (the Trimark Indenture") - The ESDs were issued under the Trimark Indenture and mature after three years. All amounts owing under the ESDs and the Indenture are subordinated in right of payment to all other senior indebtedness of Exchangeco. The ESDs bear interest at a rate of 6.0% per annum payable semi-annually in arrears at six month intervals in each year. Each Canadian $1,000 principal amount of ESDs that is issued is convertible at any time, subject to notice and other usual limitations as set out in the Trimark Indenture, at the option of the holder prior to maturity into a number of Exchangeable Shares calculated as of the date the holder elects to convert the ESDs. The calculation of the conversion rate for ESDs into Exchangeable Shares is adjustable based upon the occurrence of certain dilutive events. Exchangeco has the right at any time upon at least 20 days' and not more than 30 days' prior written notice to redeem all of the ESDs for Canadian $1,200 (plus accrued unpaid interest on such Canadian $1,000 principal amount) for each Canadian $1,000 principal amount of ESDs. Exchangeco has the right to purchase ESDs without giving notice in the open market or by tender or private contract at any price, except in certain limited circumstances. Exchangeco is required to remain a wholly-owned direct or indirect subsidiary of AMVESCAP so long as the ESDs are outstanding. Neither Exchangeco or AMVESCAP is entitled to amalgamate with any other corporation or enter into any reorganization or arrangement or effect any conveyance, sale, transfer or leas of all or substantially all of its assets, unless certain conditions are met. So long as the ESDs remain outstanding, Exchangeco is required to maintain the listing of the Exchangeable Shares on the Toronto Stock Exchange. If certain events of default specified in the Indenture occur and are continuing, the Trustee may, in its discretion, and shall, upon request of the holders of not less than 25% in principal amount of the outstanding ESDs, declare the principal of, together with accrued interest on, all ESDs to be due and payable. AMVESCAP has agreed to guarantee all of the payment obligations and other obligations of Exchangeco under the ESDs and the Trimark Indenture. All of AMVESCAP's obligations under such guarantee will be subordinated in right of payment to all other senior indebtedness of AMVESCAP. (ii) Agreements relating to the acquisition of Perpetual plc: (a) Final Offer Document, dated October 19, 2000, for Cash and Share Offer by Schroder Salomon Smith Barney on behalf of AMVESCAP PLC to acquire all of the issued share capital of Perpetual plc, incorporated by reference to AMVESCAP's Report of Foreign Private Issuer filed on Form 6-K, filed with the Securities and Exchange Commission on November 6, 2000 (the "Perpetual Offer Document") - The Perpetual Offer Document describes the terms of a cash and share offer made by Schroder Salomon Smith Barney on behalf of AMVESCAP for all of the issued and to be issued share capital of Perpetual. Schroder Salomon Smith Barney offered two new Ordinary Shares and (pound sterling) 10 in cash 42 46 for every Perpetual share, valuing each Perpetual share at approximately (pound sterling) 35.80 and the existing issued share capital of Perpetual at approximately (pound sterling) 1.05 billion, based on the closing middle market quotation of an Ordinary Share at the close of business on October 18, 2000. (iii) Agreements relating to the acquisition of National Asset Management Corporation: (a) Merger Agreement, dated as of February 28, 2001, among National Asset Management Corporation, the Sellers listed therein, the Option Holder listed therein, AMVESCAP and AVZ, Inc. (the "NAM Merger Agreement") - The NAM Merger Agreement specifies the terms of the merger of National Asset Management Corporation into AVZ, Inc., a direct, wholly owned subsidiary of AMVESCAP. Pursuant to the NAM Merger Agreement, the shareholders of National Asset Management Corporation received an upfront payment of $200 million paid in equal amounts of cash and Ordinary Shares valued as provided under the NAM Merger Agreement. The NAM Merger Agreement also provides that the shareholders of National Asset Management Corporation will receive contingent earn out payments of up to $75 million (based on achieving certain compound annual revenue growth rates over the next three years) and retention payments payable over five years totaling $25 million. Pursuant to the NAM Merger Agreement, the vesting of all outstanding options to purchase shares of National Asset Management was accelerated, the optionholders exercised their options in full prior to the date of closing of the merger transaction, and were treated as shareholders of National Asset Management Corporation for purposes of merger consideration. EXCHANGE CONTROLS There are currently no U.K. or U.S. foreign exchange control restrictions on the payment of dividends or other payments to holders of Ordinary Shares or on the conduct of AMVESCAP's operations. There are currently no restrictions under AMVESCAP's Memorandum and Articles of Association or under English law that limit the rights of non-resident or foreign owners to freely hold, vote and transfer Ordinary Shares in the same manner as U.K. residents or nationals. TAXATION This section summarizes the principal U.S. and U.K. tax consequences to U.S. Holders (defined below) that own AMVESCAP'S Ordinary Shares or ADSs. Except where noted otherwise in this section, tax consequences apply equally to U.S. Holders that own Ordinary Shares and U.S. Holders that own ADSs. "U.S. Holders" is used in this section to refer to (i) U.S. citizens, (ii) U.S. residents, (iii) U.S. corporations, (iv) U.S. partnerships and (v) U.S. citizens that are resident outside the U.S. and the U.K. and are subject to U.S. taxation on worldwide income regardless of its source. "U.S. Holders" does not include (i) U.S. citizens that are resident or ordinarily resident in the U.K., (ii) U.S. citizens or residents that have a permanent establishment or fixed base of business in the U.K. or (iii) holders of 10% or more of the voting stock of AMVESCAP. The Convention Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains, as in effect on the date hereof, is referred to in this Form 20-F as the "U.S./U.K. Income Tax Treaty". The Convention Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Estates of Deceased Persons and on Gifts, as in effect on the date hereof, is referred to in this Form 20-F as the "U.S./U.K. Estate Tax Treaty". U.S. Holders who own AMVESCAP's Ordinary Shares or ADSs generally receive the same U.S. tax treatment as if they owned shares of a U.S. company. The following chart summarizes the major differences between the tax treatment for a U.S. Holder that owns shares of a U.S. company and a U.S. Holder that owns shares of a U.K. company: 43 47
TRANSACTION U.S. COMPANY U.K. COMPANY - ----------- ------------ ------------ Purchase of shares No U.S. or U.K. tax No U.S. or U.K. tax ramifications; U.K. stamp duty or ramifications stamp duty reserve tax may be applicable(1). Ownership of shares Entire dividend taxable in No U.K. withholding tax on dividends received(3); (dividends) U.S.; no withholding tax on dividend received plus tax credit is taxable in dividends received(2) U.S.(2), (3); U.S. foreign tax credit may be claimed(4). Disposition of shares Gain on sale of shares is Gain on sale of shares is taxable in U.S.(5); U.S. taxable in U.S.(5); U.S. rules rules treat gain as capital in nature; capital gain would treat gain as capital in is either short- or long-term depending on holding nature; capital gain is either period; no U.K. tax to a U.S. Holder(5); U.K. stamp short- or long-term depending duty or stamp duty reserve tax may be applicable(1). on holding period Other transfers U.S. estate and gift rules U.K. inheritance tax would not apply to individuals (estate or gift) apply that are domiciled in the U.S. or are not considered to be a U.K. national (both determinations made under the U.S./U.K. Estate Tax Treaty)(6); U.S. estate and gift rules apply; treaty provisions provide for a tax credit if U.S. Holder is subject to tax in U.S. and U.K.(6); U.K. stamp duty or stamp duty reserve tax may be applicable(1).
- ---------- (1) If an owner of Ordinary Shares transfers his shares to another person through the use of a transfer document (i.e., a bill of sale) executed in or brought to the U.K., the purchaser usually pays the stamp duty at a rate of 0.5%. When Ordinary Shares are transferred without the use of a transfer document, stamp duty does not apply. Instead, the purchaser normally pays Stamp Duty Reserve Tax ("SDRT") at a rate of 0.5% of the purchase price. If stamp duty is charged on the transfer, SDRT may be refunded. If Ordinary Shares are transferred to the Depositary under the Amended and Restated Deposit Agreement, dated as of November 8, 2000, among AMVESCAP, the Depositary, and the holders of ADRs issued pursuant to such agreement (the "Depositary Agreement"), the Depositary will charge the U.S. Holder who purchases the ADRs representing those shares for the stamp duty or SDRT owed at a rate of 1.5%. No SDRT will be payable on an agreement to transfer ADRs, nor will U.K. stamp duty be payable on transfer of the ADRs, provided that the instrument of transfer is executed outside the U.K. and subsequently remains at all times outside the U.K. If the Depositary transfers the underlying Ordinary Shares to a U.S. Holder who owned ADSs representing such Ordinary Shares, such U.S. Holder will pay duty at a rate of L5 per transfer. If the Depositary transfers the underlying Ordinary Shares to a purchaser from a U.S. Holder who owned ADSs representing such Ordinary Shares, such purchaser will pay duty at a rate of 0.5% of the purchase price. (2) A distribution is a dividend for U.S. income tax purposes if it is paid out of either current or accumulated earnings and profits of AMVESCAP (as determined under U.S. federal income tax rules). These rules would apply to a U.S. Holder that receives a distribution from either a U.S. company or a U.K. company. The U.K. does not have a withholding tax in respect of dividends. (3) If a claim for credit under the U.S./U.K. Income Tax Treaty is made, the aggregate of the dividend and the accompanying tax credit shall be treated as income for U.S. purposes. If no claim for credit is made, only the dividend amount is treated as income for U.S. purposes, and as a result no credit may be taken. (4) U.S. Holders may reduce their U.S. tax liability by making a claim under the U.S./U.K. Income Tax Treaty for a foreign (non-U.S.) tax credit for the accompanying tax credit amount. The procedures for claiming a credit are outlined in Revenue Procedure 2000-13, 2000-6 I.R.B. 515. A U.S. Holder's ability to claim a foreign tax credit may be limited by his particular situation. (5) The U.S./U.K. Income Tax Treaty states that capital gains arising from the disposition of Ordinary Shares and ADSs are taxed in accordance with the provisions of domestic law. Under both U.S. and U.K. domestic law, capital gains are sourced to the seller's country of residence. (6) The U.S./U.K. Estate Tax Treaty generally provides for the tax paid in the U.K. to be credited against tax paid in the U.S. or for tax paid in the U.S. to be credited against tax payable in the U.K. based on priority rules set out in that Treaty. The above discussion is based on current U.S. and U.K. laws and current interpretations of these laws in effect as of the date of filing this Form 20-F. The laws and/or the interpretation of these laws are subject to change and any changes may be made retroactively to include transactions that occurred in an earlier year. In addition, the above discussion relies on representations of the Depositary and assumes that the terms and conditions of the Deposit Agreement will be followed. THIS SUMMARY DOES NOT ADDRESS THE LAWS OF ANY STATE OR LOCALITY OR ANY GOVERNMENT (OTHER THAN THE U.K. AND U.S.). FURTHERMORE, THIS SUMMARY DOES NOT ADDRESS THE TAX CONSEQUENCES TO ANY TAXPAYERS THAT ARE NOT U.S. HOLDERS 44 48 (AS DEFINED ABOVE). THE INFORMATION PROVIDED ABOVE IS INTENDED TO BE A GENERAL DISCUSSION AND SHOULD NOT BE CONSIDERED TO BE DIRECTED TO ANY PARTICULAR SHAREHOLDER. SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.K. AND U.S. FEDERAL, STATE AND LOCAL AND ANY OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ORDINARY SHARES OR ADSs WITH PARTICULAR REFERENCE TO THEIR SPECIFIC CIRCUMSTANCES. ITEM 11. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK AMVESCAP does not hedge (through the use of derivative or other financial instruments) the translation of its profits from overseas subsidiaries or other interest rate or foreign exchange exposures; therefore, significant changes in exchange rates or interest rates can materially affect the results of operations, particularly since a majority of the business and debt is denominated in U.S. dollars. AMVESCAP holds or issues financial instruments primarily to finance its operations, but also for client trading purposes in a limited number of subsidiary operations. The main risks arising from AMVESCAP's processing of customer transactions primarily arise as a result of AMVESCAP holding securities in its own investment vehicles to facilitate their orderly management. The risks associated with these securities are interest rate risk, foreign currency risk and counterparty risk. These risks are managed in accordance with limits established by AMVESCAP management and applicable regulations. Trading in financial instruments for customer related transactions only occurs in AMVESCAP's German and Austrian subsidiaries, which conduct treasury operations for their clients. This activity involves both the acceptance and placement of client deposits and loans, and the execution of clients' foreign currency and interest rate derivative contracts. Interest rate, liquidity and currency risks arising from these transactions are actively managed to minimize any residual exposure to AMVESCAP. At December 31, 2000, 56% of AMVESCAP's borrowings had an interest rate that was fixed for an average period of 3.7 years. The remainder of AMVESCAP's borrowings had a floating rate. See Note 21 to the Consolidated Financial Statements for quantitative disclosures about market risk. ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES Not applicable. PART II ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES Not applicable. ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Not applicable. ITEM 15. [RESERVED] Not applicable. 45 49 ITEM 16. [RESERVED] Not applicable. PART III ITEM 17. FINANCIAL STATEMENTS The Consolidated Financial Statements are set forth beginning at page F-1 of this Form 20-F. ITEM 18. FINANCIAL STATEMENTS Not applicable. ITEM 19. EXHIBITS Exhibits: 1.1 Articles of Organization of AMVESCAP, incorporated by reference to exhibit 3.1 to AMVESCAP's Registration Statement on Form F-3/F-1 (file nos. 333-5990 and 333-5990-01) filed with the Securities and Exchange Commission on November 21, 1996. 1.2 Memorandum of Association of AMVESCAP, incorporated by reference to exhibit 3.1 to AMVESCAP's Registration Statement on Form F-1 (file no. 33-95456) filed with the Securities and Exchange Commission on August 22, 1995. 1.3 Articles of Association of AMVESCAP, adopted on August 1, 2000. 2.1 Form of Certificate for Ordinary Shares of AMVESCAP, incorporated by reference to exhibit 4.5 to AMVESCAP's Registration Statement on Form F-3/F-1 (file nos. 33-5990 and 33-5990-01), filed with the Securities and Exchange Commission on November 21, 1996. 2.2 Form of Certificate for American Depositary Shares, representing two Ordinary Shares. 2.3 Amended and Restated Deposit Agreement, dated as of November 8, 2000, among AMVESCAP, The Bank of New York and the holders of American Depositary Receipts issued thereunder. 4.1 Standstill Agreement, dated as of November 4, 1996, by and among AMVESCAP and the shareholders named therein, incorporated by reference to exhibit 2.3 to AMVESCAP's Registration Statement on Form F-3/F-1 (file nos. 33-5990 and 33-5990-01), filed with the Securities and Exchange Commission on November 21, 1996. 4.2 Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein and A I M Management Group Inc., incorporated by reference to exhibit 2.4 to AMVESCAP's Registration Statement on Form F-3/F-1 (file nos. 33-5990 and 33-5990-01), filed with the Securities and Exchange Commission on November 21, 1996. 4.3 Amended and Restated Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein 46 50 and A I M Management Group Inc., incorporated by reference to exhibit 2.14 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1996, filed with the Securities and Exchange Commission on May 6, 1997. 4.4 Waiver, dated as of February 28, 1997, regarding the Amended and Restated Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein and A I M Management Group Inc., incorporated by reference to exhibit 2.15 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1996, filed with the Securities and Exchange Commission on May 6, 1997. 4.5 Waiver, dated as of May 1998, regarding the Amended and Restated Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein and A I M Management Group Inc., incorporated by reference to exhibit 1.1 to Amendment No. 1 to AMVESCAP's Registration Statement on Form F-3 (file no. 333-8680), filed with the Securities and Exchange Commission on May 21, 1998. 4.6 Waiver, dated as of September 29, 1998, regarding the Amended and Restated Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein and A I M Management Group Inc., incorporated by reference to exhibit 3.12 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1998, filed with the Securities and Exchange Commission on March 30, 1999. 4.7 Announcement of Waiver, dated as of November 22, 2000, regarding the Amended and Restated Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein and A I M Management Group Inc., incorporated by reference to AMVESCAP's Report of Foreign Private Issuer filed on Form 6-K, filed with the Securities and Exchange Commission on November 22, 2000. 4.8 Registration Rights Agreement, dated as of February 28, 1997, by and among AMVESCAP and the former shareholders of A I M Management Group, Inc. named therein, incorporated by reference to exhibit 2.11 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1996, filed with the Securities and Exchange Commission on May 6, 1997. 4.9 Indemnification Agreement, dated as of February 28, 1997, by and among AMVESCAP, Charles T. Bauer, Robert H. Graham, Gary T. Crum and certain related persons named therein, incorporated by reference to exhibit 2.6 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1996, filed with the Securities and Exchange Commission on May 6, 1997. 4.10 Amended and Restated Credit Agreement, dated as of December 17, 1997, among AMVESCAP, as borrower, the lenders named therein, Citibank, N.A. and NationsBank, N.A., as co-syndication agents, and NationsBank, N.A., as funding agent, incorporated by reference to exhibit 3.17 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1997, filed with the Securities and Exchange Commission on April 27, 1998. 47 51 4.11 Letter Amendment No. 1, dated as of June 7, 2000, to Amended and Restated Credit Agreement, dated as of December 17, 1997, among AMVESCAP, as borrower, the lenders named therein, Citibank, N.A. and Bank of America, N.A., as co-syndication agents, and Bank of America, N.A., as funding agent. 4.12 Letter Amendment No. 2, dated as of October 19, 2000, to Amended and Restated Credit Agreement, dated as of December 17, 1997, among AMVESCAP, as borrower, the lenders named therein, Citibank, N.A. and Bank of America, N.A., as co-syndication agents, and Bank of America, N.A., as funding agent. 4.13 Letter Amendment No. 3, dated as of March 13, 2001, to Amended and Restated Credit Agreement, dated as of December 17, 1997, among AMVESCAP, as borrower, the lenders named therein, Citibank, N.A. and Bank of America, N.A., as co-syndication agents, and Bank of America, N.A., as funding agent. 4.14 Assumption of Guaranty from A I M Advisors, Inc., dated as of December 22, 1997, incorporated by reference to exhibit 3.18 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1997, filed with the Securities and Exchange Commission on April 27, 1998. 4.15 Assumption of Guaranty from A I M Management Group Inc., dated as of December 22, 1997, incorporated by reference to exhibit 3.19 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1997, filed with the Securities and Exchange Commission on April 27, 1998. 4.16 Guaranty from INVESCO, Inc., INVESCO North American Holdings, Inc. and INVESCO Capital Management, Inc., dated as of February 14, 1997. 4.17 Second Amended and Restated Purchase and Sale Agreement dated as of December 14, 2000, among A I M Management Group Inc., Citibank, N.A. and Citicorp North America, Inc. 4.18 Indenture, dated as of December 16, 1996, among LGT Asset Management, Inc., LGT Bank in Liechtenstein Aktiengesellschaft, and Citibank, N.A., incorporated by reference to exhibit 3.28 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1998, filed with the Securities and Exchange Commission on March 30, 1999. 4.19 First Supplemental Indenture, dated as of December 31, 1999, among INVESCO, Inc., LGT Bank in Lichetenstein Aktiengesellschaft, and Citibank, N.A. 4.20 Loan Agreement, dated December 14, 1995, between LGT BIL Ltd. and Bank in Liechtenstein Aktiengesellschaft, incorporated by reference to exhibit 3.29 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1998, filed with the Securities and Exchange Commission on March 30, 1999. 4.21 Indenture, dated as of May 7, 1998, for AMVESCAP's Senior Exchange Notes due 2003 and 2005, among AMVESCAP, A I M Management Group, Inc., A I M Advisors, Inc., INVESCO, Inc., INVESCO North American Holdings, Inc. and INVESCO Capital Management, Inc., as initial securities guarantors, and SunTrust Bank, Atlanta, as trustee, incorporated by reference to exhibit 4.1 to AMVESCAP's Registration Statement on Form F-4 (file no. 333-8954) filed with the Securities and Exchange Commission on June 15, 1998. 4.22 AMVESCAP Deferred Fees Share Plan. 48 52 4.23 Amended and Restated Merger Agreement, dated as of May 9, 2000, between AMVESCAP and Trimark. 4.24 Support Agreement, dated as of August 1, 2000, between AMVESCAP, AVZ Callco Inc., and AMVESCAP Inc. 4.25 Voting and Exchange Trust Agreement, dated as of August 1, 2000, between AMVESCAP, AMVESCAP Inc. and CIBC Mellon Trust Company. 4.26 Indenture, dated August 1, 2000, among AMVESCAP Inc., AMVESCAP and CIBC Mellon Trust Company. 4.27 Final Offer Document, dated October 19, 2000, for Cash and Share Offer by Schroder Salomon Smith Barney on behalf of AMVESCAP PLC to acquire all of the issued share capital of Perpetual plc, incorporated by reference to AMVESCAP's Report of Foreign Private Issuer filed on Form 6-K, filed with the Securities and Exchange Commission on November 6, 2000. 4.28 Merger Agreement, dated as of February 28, 2001, among National Asset Management Corporation, the Sellers listed therein, the Option Holder listed therein, AMVESCAP and AVZ, Inc. 49 53 INDEX TO FINANCIAL STATEMENTS
AMVESCAP PLC AND SUBSIDIARIES PAGE ---- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F-2 CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 F-3 CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 F-3 CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2000 AND 1999 F-4 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' FUNDS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 F-5 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 F-6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2000, 1999, AND 1998 F-7
F-1 54 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To AMVESCAP PLC: We have audited the accompanying consolidated balance sheets of AMVESCAP PLC and subsidiaries as of December 31, 2000 and 1999 and the related consolidated statements of profit and loss, total recognized gains and losses, shareholders' funds, and cash flows for each of the three years in the period ended December 31, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of AMVESCAP PLC and subsidiaries as of December 31, 2000 and 1999 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United Kingdom. Certain accounting practices of the Company used in preparing the accompanying consolidated financial statements conform with generally accepted accounting principals in the United Kingdom but vary in certain respects from accounting principles generally accepted in the United States. A description of these differences and the adjustments required to conform consolidated shareholders' equity as of December 31, 2000 and 1999 and consolidated net income for each of the three years in the period ended December 31, 2000 to accounting principles generally accepted in the United States are set forth in Note 23 to the consolidated financial statements. /s/ ARTHUR ANDERSEN London, England February 28, 2001 F-2 55 CONSOLIDATED STATEMENTS OF INCOME
year ended December 31 - ----------------------------------------------------------------------------------------------------------- 2000 1999 1998 L.'000 L.'000 L.'000 L.'000 L.'000 - -------------------------------------- -------------------------------------- ---------- ---------- Ordinary Exceptional Activities Items Total ------------------------------------- REVENUES 1,628,662 -- 1,628,662 1,072,350 802,172 Operating Expenses (1,039,751) (51,804) (1,091,555) (719,637) (544,856) - -------------------------------------- ------------------------------------- ---------- ---------- 588,911 (51,804) 537,107 352,713 257,316 Exceptional item - integration -- -- -- -- (48,600) Goodwill amortization (note 10) (56,417) -- (56,417) (36,754) (21,221) - -------------------------------------- ------------------------------------- ---------- ---------- OPERATING PROFIT 532,494 (51,804) 480,690 315,959 187,495 Investment income (note 4) 17,147 -- 17,147 11,809 12,183 Interest expense (note 5) (51,604) -- (51,604) (44,726) (38,200) - -------------------------------------- ------------------------------------- ---------- ---------- PROFIT BEFORE TAXATION 498,037 (51,804) 446,233 283,042 161,478 Taxation (note 7) (176,870) 19,167 (157,703) (102,010) (67,373) - -------------------------------------- ------------------------------------- ---------- ---------- PROFIT FOR THE FINANCIAL YEAR 321,167 (32,637) 288,530 181,032 94,105 Dividends (note 8) (75,827) -- (75,827) (58,244) (50,594) - -------------------------------------- ------------------------------------- ---------- ---------- RETAINED PROFIT FOR THE YEAR 245,340 (32,637) 212,703 122,788 43,511 - ----------------------------------------------------------------------------------------------------------- EARNINGS PER SHARE BEFORE GOODWILL AMORTIZATION (NOTE 9): -basic 55.7p (4.8)p 50.9p 34.0p 26.0p* -diluted 53.0p (4.6)p 48.4p 32.7p 24.3p* EARNINGS PER SHARE: -basic 47.4p (4.8)p 42.6p 28.3p 15.7p -diluted 45.1p (4.6)p 40.5p 27.1p 14.7p - -----------------------------------------------------------------------------------------------------------
* Earnings per share before goodwill amortization and exceptional items. CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES
year ended December 31 - ----------------------------------------------------------------------------------- 2000 1999 1998 L.'000 L.'000 L.'000 - ----------------------------------------------- -------- ------- ------- Profit for the financial year 288,530 181,032 94,105 Currency translation differences on investments in overseas subsidiaries (45,979) (18,645) 14,609 - ----------------------------------------------- -------- ------- ------- Total recognized gains and losses for the year 242,551 162,387 108,714 - ----------------------------------------------------------------------------------
The accompanying notes form part of these accounts. F-3 56 CONSOLIDATED BALANCE SHEETS
December 31 - --------------------------------------------------------------------------------------------------------------- 2000 1999 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------- ------------------------ ------------------------ FIXED ASSETS Goodwill (note 10) 2,375,542 664,135 Investments (note 11) 152,521 128,921 Tangible assets (note 12) 203,341 108,021 - ------------------------------------------------------- ------------------------ ------------------------ 2,731,404 901,077 CURRENT ASSETS Debtors (note 13) 686,101 550,343 Investments (note 11) 124,311 60,135 Cash 342,073 189,732 - ------------------------------------------------------- ---------- ---------- 1,152,485 800,210 CREDITORS (NOTE 14) (764,068) (576,447) - ------------------------------------------------------- ---------- ---------- NET CURRENT ASSETS, EXCLUDING BANKING AND INSURANCE ACTIVITIES 388,417 223,763 - ------------------------------------------------------- ---------------------------------------------------- BANKING AND INSURANCE ACTIVITIES Cash 90,562 -- Customer and counterparty debtors 227,185 125,513 Policyholder debtors 94,122 -- Customer and counterparty creditors (315,935) (129,842) Policyholder creditors (94,122) -- - ------------------------------------------------------- ---------- ---------- 1,812 (4,329) ------------------------ ------------------------ TOTAL ASSETS LESS CURRENT LIABILITIES 3,121,633 1,120,511 LONG-TERM DEBT (NOTE 15) (960,023) (659,120) PROVISIONS FOR LIABILITIES AND CHARGES (NOTE 16) (58,530) (24,730) - ------------------------------------------------------- ------------------------ ------------------------ NET ASSETS 2,103,080 436,661 - --------------------------------------------------------------------------------------------------------------- CAPITAL AND RESERVES Called up share capital (note 19) 192,759 168,617 Share premium account 1,488,933 478,860 Exchangeable shares (note 19) 477,153 -- Profit and loss account 593,420 380,717 - ------------------------------------------------------- ------------------------ ------------------------ 2,752,265 1,028,194 Other reserves (649,185) (591,533) - ------------------------------------------------------- ------------------------ ------------------------ SHAREHOLDERS' FUNDS, EQUITY INTERESTS 2,103,080 436,661 - ---------------------------------------------------------------------------------------------------------------
The accompanying notes form part of these accounts. These accounts were approved by the Board of Directors on February 28, 2001, and were signed on its behalf by: Charles W. Brady Robert F. McCullough F-4 57 CONSOLIDATED SHAREHOLDERS' FUNDS
Movements in shareholders' funds comprise: - ---------------------------------------------------------------------------------------------------------------------- Called up Profit share Exchangeable Share Other and loss capital shares premium reserves account Total L.'000 L.'000 L.'000 L.'000 L.'000 L.'000 - ---------------------------------------------------------------------------------------------------------------------- JANUARY 1, 1998 148,855 -- 157,365 (542,100) 214,418 (21,462) Profit for the financial year -- -- -- -- 94,105 94,105 Dividends -- -- -- -- (50,594) (50,594) Exercise of options 4,362 -- 37,164 (36,356) -- 5,170 GT Global acquisition 10,625 -- 263,196 -- -- 273,821 Conversion of loan note 3,664 -- 11,657 104 -- 15,425 Currency translation differences on investments in overseas subsidiaries -- -- -- 14,505 -- 14,505 - ---------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 1998 167,506 -- 469,382 (563,847) 257,929 330,970 Profit for the financial year -- -- -- -- 181,032 181,032 Dividends -- -- -- -- (58,244) (58,244) Exercise of options 1,111 -- 9,478 (9,041) -- 1,548 Currency translation differences on investments in overseas subsidiaries -- -- -- (18,645) -- (18,645) - ---------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 1999 168,617 -- 478,860 (591,533) 380,717 436,661 Profit for the financial year -- -- -- -- 288,530 288,530 Dividends -- -- -- -- (75,827) (75,827) Exercise of options 1,940 -- 26,197 (11,673) -- 16,464 Trimark acquisition 1,266 232,034 53,700 -- -- 287,000 Conversion of exchangeable shares into ordinary shares 5,919 (260,308) 254,389 -- -- -- Conversion of Equity Subordinated Debentures -- 505,427 -- -- -- 505,427 Perpetual acquisition 15,017 -- 675,787 -- -- 690,804 Currency translation differences on investments in overseas subsidiaries -- -- -- (45,979) -- (45,979) - ---------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 2000 192,759 477,153 1,488,933 (649,185) 593,420 2,103,080 - ----------------------------------------------------------------------------------------------------------------------
The accompanying notes form part of these accounts. F-5 58 CONSOLIDATED CASH FLOW STATEMENTS
year ended December 31 - ----------------------------------------------------------------------------------------- 2000 1999 1998 L.'000 L.'000 L.'000 - ------------------------------------------------------ -------- -------- -------- OPERATING ACTIVITIES Operating profit 480,690 315,959 187,495 Exceptional items 32,736 -- 32,207 Depreciation 53,607 40,621 26,216 Amortization 56,417 62,674 34,965 Decrease/(increase) in debtors 34,470 (225,143) 35,548 (Decrease)/increase in creditors (66,119) 159,039 (182,418) Other (10,833) 16,595 453 - ------------------------------------------------------ -------- -------- -------- 580,968 369,745 134,466 Banking and insurance activities Cash used for banking activities (90,562) -- -- (Increase) in customer and counterparty debtors (50,724) (10,730) (9,293) Increase in customer and counterparty creditors 147,081 7,032 34,688 -------- -------- -------- 5,795 (3,698) 25,395 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest and dividends received 15,634 13,123 10,804 Interest paid (48,909) (44,148) (34,210) - ------------------------------------------------------ -------- -------- -------- (33,275) (31,025) (23,406) TAXATION (115,758) (56,454) (60,111) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of tangible fixed assets, net of sales (61,996) (56,721) (54,644) (Purchases)/disposals of fixed asset investments, net (Note 11) (12,164) 6,425 (18,706) - ------------------------------------------------------ -------- -------- -------- (74,160) (50,296) (73,350) ACQUISITIONS, NET OF CASH, CASH EQUIVALENTS AND BANK OVERDRAFT ACQUIRED (235,321) -- (126,959) DIVIDENDS PAID (63,558) (54,394) (44,410) -------- -------- -------- CASH INFLOW BEFORE THE USE OF CASH EQUIVALENTS 64,691 173,878 (168,375) FINANCING Issues of ordinary share capital 16,464 1,548 5,170 Issues of senior notes -- -- 395,155 Credit facility, net 51,401 (53,911) 72,889 Other loans and bank overdrafts 7,941 (54,381) (252,856) - ------------------------------------------------------ -------- -------- -------- 75,806 (106,744) 220,358 Change in bank overdrafts (8,315) 24,529 (21,627) CHANGE IN CASH EQUIVALENTS (172,361) 6,852 (33,833) -------- -------- -------- (DECREASE)/INCREASE IN CASH (40,179) 98,515 (3,477) - ----------------------------------------------------------------------------------------- RECONCILIATION TO INCREASE IN CASH AT BANK AND IN HAND (Decrease)/increase in cash (40,179) 98,515 (3,477) Change in bank overdrafts 8,315 (24,529) 21,627 Change in cash equivalents 172,361 (6,852) 33,833 Foreign exchange movement on cash and cash equivalents 11,844 2,947 (3,013) - ----------------------------------------------------------------------------------------- INCREASE IN CASH AT BANK AND IN HAND 152,341 70,081 48,970 - -----------------------------------------------------------------------------------------
The accompanying notes form part of these accounts. F-6 59 AMVESCAP PLC AND SUBSIDIARIES ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES (a) Basis of accounting and consolidation The accounts consolidate the accounts of AMVESCAP PLC and all of its subsidiaries. Operating profit includes the results of subsidiaries acquired from their effective dates of acquisition. No profit and loss account is presented for the Company as permitted by S230 of the Companies Act 1985. The consolidated accounts have been prepared in accordance with the Companies Act 1985 (Schedule 4) and applicable accounting standards. They combine the accounts of the Group undertakings at December 31 and, as permitted by the Act, the format of the accounts has been adapted to give a true and fair view of the state of affairs and the profit of the consolidated Group. The balance sheet and cash flow statement presentations differ from the Companies Act 1985, in that the banking and insurance cash, debtors, and creditors have been separately stated in the financial statements so as to separate these activities from the asset management activities of the Group. The accounts have been prepared on a historic cost convention as modified to include certain insurance assets at market value. The Companies Act 1985 requirements has also been adapted in respect of exchangeable shares. See Note 19. (b) Goodwill The excess of the cost of shares in subsidiary undertakings acquired over the fair value of their net assets is capitalized as an asset and amortized through the profit and loss account over an estimated useful life of 20 years. Prior to 1998 goodwill was charged directly to other reserves. (c) Revenue Revenue represents management, distribution, transfer agent, trading and other fees. (d) Deferred sales commissions Amounts paid to brokers and dealers for sales of certain mutual funds that have a contingent deferred sales charge are capitalized and amortized over a period not to exceed the redemption period of the related mutual fund. (e) Tangible fixed assets and depreciation Depreciation is provided on fixed assets at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its expected useful life: leasehold improvements over the lease term; computers and other various equipment, between three and seven years. (f) Investments Investments held as fixed assets are stated at cost less provisions for any impairment in value. Investments held as current assets are stated at the lower of cost or net realizable value. (g) Leases Assets held under finance leases are capitalized and included in fixed assets. Rentals under operating leases are charged evenly to the profit and loss account over the lease term. F-7 60 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (h) Taxation Corporation tax payable is provided on taxable profits at the current rate. Deferred taxation is provided on the liability method on all timing differences to the extent that they are expected to reverse in the future, calculated at the rate at which it is estimated that tax will be payable. (i) Foreign currencies Assets and liabilities of overseas subsidiaries are translated at the rates of exchange ruling at the balance sheet date. Profit and loss account figures are translated at the weighted average rates for the year. Exchange differences arising on the translation of overseas subsidiaries' accounts are taken directly to reserves. Exchange differences on foreign currency borrowings, to the extent that they are used to finance or provide a hedge against Company equity investments in foreign enterprises, are taken directly to reserves. All other translation and transaction exchange differences (which are not material) are taken to the profit and loss account. (j) Pensions For defined contribution schemes, pension contributions payable in respect of the accounting period are charged to the profit and loss account. For defined benefit schemes, pension contributions are charged systematically to the profit and loss account over the expected service lives of employees. Variations from the regular cost are allocated to the profit and loss account over the average remaining service lives of employees. 2. ACQUISITIONS TRIMARK FINANCIAL CORPORATION The Company purchased 100% of the issued share capital of Trimark Financial Corporation ("Trimark"), a major Canadian mutual fund company, on August 1, 2000. The combination has been accounted for as an acquisition, and the results of Trimark have been included from August 1, 2000. The consideration for this acquisition was L.1.2 billion, including transaction costs, and was satisfied by the payment of L.331.1 million in cash and the issuance of 5.0 million ordinary shares, 21.4 million shares exchangeable for ordinary shares, and L.574 million in Equity Subordinated Debentures ("ESDs"). The Company adjusted and revalued all assets and liabilities acquired to be consistent with the Company's accounting policies and to reflect fair market value at the date of the acquisition. The principal adjustments relate to the revaluations of deferred broker commissions and investment balances together with the related tax effects of the adjustments. For the year ended March 31, 2000, Trimark earned a profit after taxation of L.40.9 million. The summarized profit and loss account for the period from April 1, 2000 to July 31, 2000, shown on the basis of the accounting policies of AMVESCAP PLC, is as follows:
L.'000 - -------------------------------------------- Revenues 55,171 Operating profit 17,160 Profit before taxation 19,728 Profit for the financial period 11,146 - --------------------------------------------
F-8 61 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The operations of Trimark and AMVESCAP's existing Canadian subsidiary have been reorganized, integrated, and merged. The operating results and cashflows of the combined group do not separately segregate the former Trimark operation. It is therefore not possible to determine or estimate the post-acquisition results. PERPETUAL PLC In December 2000, the Company acquired 100% of the issued share capital of Perpetual PLC ("Perpetual"), a major UK entity. The consideration for this acquisition was L.1.0 billion, including transaction costs, and was satisfied by the issuance of 60.1 million ordinary shares, L.128.9 million in Loan Notes, and L.181.9 million in cash. The combination has been accounted for as an acquisition. Perpetual is included in the consolidated accounts as of December 31, 2000. For the year ended September 30, 2000, Perpetual earned a profit after taxation of L.51.1 million. The summarized profit and loss account for the period from October 1, 2000 to December 31, 2000 is as follows:
L.'000 - -------------------------------------------- Revenues 30,470 Operating loss (816) Profit before taxation 1,551 Loss for the financial period (4,562) - --------------------------------------------
The fair value of net assets acquired upon both acquisitions was determined as follows:
Perpetual Trimark Trimark fair book book value Fair value value adjustments value L.'000 L.'000 L.'000 L.'000 - --------------------------------------------------------------------------------------------- Fixed assets 78,153 59,871 (4,376) 133,648 Current assets 294,274 294,625 56,251 645,150 --------------------------------------------------- Total assets 372,427 354,496 51,875 778,798 --------------------------------------------------- Creditors (176,152) (124,792) (313) (301,257) Provisions for reorganization and restructuring -- (2,698) -- (2,698) Provisions for liabilities and charges (1,533) (14,823) (23,203) (39,559) --------------------------------------------------- Total liabilities (177,685) (142,313) (23,516) (343,514) --------------------------------------------------- Net assets 194,742 212,183 28,359 435,284 --------------------------------------------------- Goodwill 806,876 960,689 1,767,565 --------------------------------------------------- Consideration 2,202,849 ---------- Trimark acquisition satisfied by: Issuance of 26.4 million shares 287,000 Issuance of ESDs 573,986 Cash, including transaction costs 340,245 - --------------------------------------------------------------------------------------------- 1,201,231 - --------------------------------------------------------------------------------------------- Perpetual acquisition satisfied by: Issuance of ordinary shares 690,804 Issuance of Loan Notes 128,934 Cash, including transaction costs 181,880 - --------------------------------------------------------------------------------------------- 1,001,618 - ---------------------------------------------------------------------------------------------
The fair value adjustments relate to the Trimark acquisition and include the revaluation of the deferred sales commission asset and its related deferred tax liability. F-9 62 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In connection with both acquisitions, an amount of L.43.8 million (L.28.0 million after tax) has been charged to the consolidated profit and loss account as an exceptional item for costs incurred in reorganizing, restructuring and integrating the acquisitions. Costs include staff retention payments and expenses associated with combining systems and other business processes. 1998 Acquisition of GT Global On May 29, 1998, the Company completed the acquisition of GT. The total consideration payable in connection with the GT Acquisition was L.499.0 million, part of which was paid through the issuance of 42.5 million Ordinary Shares. Transaction costs associated with the GT Acquisition were capitalized and included in goodwill. The L.48.6 million estimated cost of integrating the business of GT into the Company's businesses was reflected in the Consolidated Financial Statements as an exceptional item. 3. SEGMENTAL INFORMATION Geographical analysis of the Group's business, which is principally investment management, is as follows:
Revenues Profit after exceptional items - ---------------------- -------------------------------------- ------------------------------------ 2000 1999 1998 2000 1999 1998 L.'000 L.'000 L.'000 L.'000 L.'000 L.'000 -------------------------------------- ------------------------------------ North America 1,324,871 859,993 659,241 492,946 322,611 208,379 Europe and Pacific 303,791 212,357 142,931 44,161 30,102 337 - ---------------------- -------------------------------------- ------------------------------------ 1,628,662 1,072,350 802,172 537,107 352,713 208,716 -------------------------------------- ------------------------------------ Goodwill amortization (56,417) (36,754) (21,221) Net interest expense (34,457) (32,917) (26,017) ------------------------------------ Profit before taxation 446,233 283,042 161,478 - -------------------------------------------------------------------------------------------------------
Net assets - ------------------ ------------------------ 2000 1999 L.'000 L.'000 ------------------------ North America 325,187 187,434 Europe and Pacific 94,941 97,707 - ------------------ ------------------------ 420,128 285,141 Goodwill 2,375,542 664,135 Net debt (692,590) (512,615) - ------------------ ------------------------ Net assets 2,103,080 436,661 - ---------------------------------------------
The US dollar profits have been translated into sterling at an average rate of 1.51 (1999: 1.62). Revenue reflects the geographical segments from which services are provided. Profit after exceptional items is stated after charging auditors' remuneration of L.1,361,000 in 2000 (1999: L.1,218,000) for audit work and L.1,295,000 in 2000 (1999: L.1,044,000) for non-audit work. Profit after exceptional items is also stated after charging L.8,000,000 in restructuring charges for the US Institutional business. 4. INVESTMENT INCOME
2000 1999 1998 L.'000 L.'000 L.'000 - --------------------------------- ------- ------- ------- Interest receivable 15,361 8,597 12,235 Income from listed investments 900 1,480 (1,347) Income from unlisted investments 886 1,732 1,295 - --------------------------------- ------- ------- ------- 17,147 11,809 12,183 - ---------------------------------------------------------------
F-10 63 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 5. INTEREST EXPENSE
2000 1999 1998 L.'000 L.'000 L.'000 - --------------- ------- ------- ------- Senior notes 27,695 26,343 16,771 Credit facility 14,900 14,448 13,501 ESDs 6,286 -- -- Other 2,723 3,935 7,928 - --------------- ------- ------- ------- 51,604 44,726 38,200 - ------------------------------------------------
6. DIRECTORS AND EMPLOYEES
2000 1999 1998 L.'000 L.'000 L.'000 - ---------------------- ------- ------- ------- Wages and salaries 452,751 308,213 237,008 Social security costs 29,267 18,523 14,366 Other pension costs 33,696 22,440 17,451 - ---------------------- ------- ------- ------- 515,714 349,176 268,825 - -----------------------------------------------------
Global Stock Plan ("the Plan") A sum of L.29,688,000 (1999: L.12,453,000) has been paid into the Plan, a remuneration scheme for senior executives. This Plan is funded by a profit-linked bonus paid annually in respect of directors and senior employees into a discretionary employee benefit trust which then purchases shares of the Company in the open market. These securities are allocated within the trust and, provided they retain their position within the Company for a period of three years from the date of the bonus, are transferred to the participants upon retirement or termination of employment. The trust held 11,276,000 ordinary shares on December 31, 2000 (1999: 9,341,000). The average number of employees of the Company during the year was 6,557 (1999: 5,300). Of these totals, 5,020 (1999: 4,000) were employed in North America and the remainder were employed in Europe and the Pacific. Emoluments of the chairman and the directors are shown in the Report of the Board on Remuneration. 7. TAXATION
2000 1999 1998 L.'000 L.'000 L.'000 - ----------------------------------- -------- -------- -------- UK taxation: Corporation tax 36,864 30,751 2,500 Double taxation relief (19,952) (18,654) -- - ----------------------------------- -------- -------- -------- 16,912 12,097 2,500 Foreign taxation: Overseas current taxation 147,410 79,333 58,770 Overseas deferred taxation (6,619) 10,580 6,103 - ----------------------------------- -------- -------- -------- 140,791 89,913 64,873 - ----------------------------------- -------- -------- -------- 157,703 102,010 67,373 - ----------------------------------------------------------------------
As at present there is no intention to distribute the retained earnings of certain overseas subsidiaries, no provision has been made for any additional taxation that might arise on distribution. Deferred taxation principally arises in relation to employee share options, contributions to the Global Stock Plan, exceptional items on acquisitions, and the net impact of recording loss carryforwards and deferred commission amortization as a result of the Trimark acquisition. 8. DIVIDENDS
2000 1999 1998 L.'000 L.'000 L.'000 - ------------------------------------------------------ ------- ------- ------- Interim paid, 4.0p per share (1999: 3.5p, 1998: 3p) 28,014 22,700 18,900 Final proposed, 6.0p per share (1999: 5.5p, 1998: 5p) 47,813 35,544 31,694 - ------------------------------------------------------ ------- ------- ------- 75,827 58,244 50,594 - --------------------------------------------------------------------------------------
F-11 64 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The trustees of the Employee Share Option Trust waived dividends amounting to L.2,317,000 in 2000 (1999: L.2,796,000). 9. EARNINGS PER SHARE Profit before goodwill amortization and exceptional items is a more appropriate basis for the calculation of earnings per share since this represents a more consistent measure of the year by year performance of the business, therefore the calculation below is presented on that basis. Basic earnings per share is based on the weighted average number of ordinary and exchangeable shares outstanding during the respective periods. Diluted earnings per share takes into account the effect of dilutive potential ordinary and exchangeable shares outstanding during the period.
Number of Profit shares Per share 2000 L.'000 '000 L.'000 - ------------------------------------------------------------ Basic earnings per share 377,584 678,006 55.7p ------- Conversion of ESDs 4,093 8,997 Issuance of options -- 33,763 - ------------------------------------------------------------ Diluted earnings per share 381,677 720,766 53.0p - ------------------------------------------------------------ 1999 - ------------------------------------------------------------ Basic earnings per share 217,786 639,636 34.0p ------- Issuance of options -- 27,271 - ------------------------------------------------------------ Diluted earnings per share 217,786 666,907 32.7p - ------------------------------------------------------------ 1998 - ------------------------------------------------------------ Basic earnings per share 156,126 601,234 26.0p ------- Issuance of options -- 33,145 Conversion of loan notes 521 8,977 - ------------------------------------------------------------ Diluted earnings per share 156,647 643,356 24.3p - ------------------------------------------------------------
10. GOODWILL
Net Cost Amortization book value L.'000 L.'000 L.'000 - ------------------------------------------------------------------- January 1, 2000 722,110 (57,975) 664,135 Acquisitions 1,767,565 -- 1,767,565 Provided during the year -- (56,417) (56,417) Exchange adjustment 259 -- 259 - ------------------------------------------------------------------- December 31, 2000 2,489,934 (114,392) 2,375,542 - -------------------------------------------------------------------
Prior to 1998, goodwill has been written off as follows:
L.'000 - ---------------------------------------- --------- To other reserves 1,184,339 To cancellation of share premium account 44,468 To profit and loss account 73,600 - ---------------------------------------- --------- 1,302,407 - ------------------------------------------------------
F-12 65 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 11. INVESTMENTS Investments Held as Fixed Assets
Shares of Other AMVESCAP PLC investments Total L.'000 L.'000 L.'000 - ----------------------------------------------------------------------- Cost January 1, 1999 108,393 26,803 135,196 Exchange adjustments -- 3,608 3,608 Arising from acquisitions -- -- -- Additions 8,207 16,235 24,442 Disposals (19,784) (11,027) (30,811) - ----------------------------------------------------------------------- December 31, 1999 96,816 35,619 132,435 - ----------------------------------------------------------------------- Exchange adjustments -- (778) (778) Arising from acquisitions -- 12,214 12,214 Additions 35,407 24,727 60,134 Disposals (42,053) (5,898) (47,951) - ----------------------------------------------------------------------- December 31, 2000 90,170 65,884 156,054 - ----------------------------------------------------------------------- Provisions against investments January 1, 1999 (2,027) (1,431) (3,458) Net change -- (56) (56) - ----------------------------------------------------------------------- December 31, 1999 (2,027) (1,487) (3,514) Net change -- (19) (19) - ----------------------------------------------------------------------- December 31, 2000 (2,027) (1,506) (3,533) - ----------------------------------------------------------------------- Net book value December 31, 1998 106,366 25,372 131,738 December 31, 1999 94,789 34,132 128,921 December 31, 2000 88,143 64,378 152,521 - -----------------------------------------------------------------------
Shares of AMVESCAP PLC include the holdings of the Employee Share Option Trust ("ESOT") and comprise 17,711,538 ordinary shares. The options vest after three years from the date of grant and lapse after 10 years. On December 31, 2000 there were options over these securities at exercise prices between 90p and 1680p. The market price of the ordinary shares at the end of 2000 was 1374p. Other investments consist of investments in various Group mutual funds, unit trusts, partnership interests, investments in collateralized loan and bond obligations, investments on behalf of deferred compensation plans, and treasury securities. Investments Held as Current Assets Current asset investments include listed investments of L.99,251,000 (1999: L.56,786,000) and unlisted investments of L.25,060,000 (1999: L.3,349,000). F-13 66 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 12. TANGIBLE ASSETS Tangible assets are comprised of land, buildings, technology and other equipment.
Net Cost Depreciation book value L.'000 L.'000 L.'000 - ------------------------------------------------------------------ January 1, 1999 134,228 (45,447) 88,781 Exchange adjustment 5,833 (2,693) 3,140 Additions 58,002 -- 58,002 Provided during the year -- (40,621) (40,621) Disposals (16,985) 15,704 (1,281) - ------------------------------------------------------------------ January 1, 2000 January 1, 2000 181,078 (73,057) 108,021 Exchange adjustment 17,302 (9,751) 7,551 Additions 63,514 -- 63,514 Arising from acquisitions 79,380 -- 79,380 Provided during the year -- (53,607) (53,607) Disposals (7,811) 6,293 (1,518) - ------------------------------------------------------------------ December 31, 2000 333,463 (130,122) 203,341 - ------------------------------------------------------------------
13. DEBTORS
2000 1999 L.'000 L.'000 - -------------------------- -------------------- Unsettled fund debtors 191,446 246,364 Trade debtors 174,645 137,469 Deferred sales commissions 204,384 68,487 Other debtors 60,647 50,223 Deferred taxation 33,196 21,841 Prepayments 21,783 25,959 - ------------------------------------------------------------------------ 686,101 550,343 - ------------------------------------------------------------------------
14. CREDITORS
2000 1999 L.'000 L.'000 - ------------------------------------ -------------------- Unsettled fund creditors 226,399 289,212 Accruals and other 320,162 168,606 Corporation tax payable 104,400 49,437 Proposed ordinary dividend 47,813 35,544 Trade creditors 50,002 33,648 Bank overdraft 8,453 -- Current maturities of long-term debt 6,839 -- - ------------------------------------------------------------------------ 764,068 576,447 - ------------------------------------------------------------------------
15. LONG-TERM DEBT
2000 1999 L.'000 L.'000 - ---------------------------------------------- -------------------- Senior notes - US $250 million due 2003 at 6.375% and US$400 million due 2005 at 6.6% 444,201 405,035 US$700 million credit facility due 2003 300,000 228,066 ESDs - C$ 149.6 million due 2003 at 6% 67,115 -- Loan Notes due 2005 128,934 -- DM60 million fixed notes due 2001-2003, Interest 6.15% - 6.75% 12,454 12,851 Senior notes - US$9.8 million due 2001 at 6.5% and US$10 million due 2006 at 6.875% 14,158 13,168 - ---------------------------------------------- -------------------- Total long-term debt 966,862 659,120 Less: current maturities of long-term debt (6,839) -- - ---------------------------------------------- -------------------- Total long-term debt net of current maturities 960,023 659,120 - ------------------------------------------------------------------------
F-14 67 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The credit facility provides for borrowings of various maturities and contains certain conditions including a restriction to declare or pay cash dividends in excess of 60% of consolidated net profit. Interest is payable based upon LIBOR rates in existence at the time of each borrowing. The ESDs are issued by a subsidiary of the Company, bear interest at 6% per year (payable semi-annually), and are convertible at any time at the option of the holder into exchangeable shares until August 1, 2003. During 2000, L.505.4 million in ESDs were converted into 45.9 million exchangeable shares, and L.1.5 million in ESDs were settled in cash. The Loan Notes bear interest at the six-month LIBOR rate less 0.5% payable semi-annually. Holders have the right to redeem the Loan Notes on the semi-annual interest payment dates. Maturities of long-term debt are as follows: L.6,839,000 in 2001, L.6,227,000 in 2002, L.544,189,000 in 2003, L.nil in 2004, and L.409,607,000 due thereafter. 16. PROVISIONS FOR LIABILITIES AND CHARGES
Merger and acquisition provisions L.'000 - ---------------------------------- ------- January 1, 2000 24,730 Cash paid (4,789) Acquisitions and other adjustments 37,488 Foreign exchange 1,101 - ---------------------------------- ------- December 31, 2000 58,530 - ----------------------------------------------
These provisions consist of amounts provided as a result of the 1997 merger with A I M Management Group Inc., the 1998 acquisition of GT Global, and the 2000 acquisitions of Trimark and Perpetual. AIM provisions include commitments payable pursuant to the AIM merger agreement which expire in 2002. Provisions for liabilities and charges include L.39.6 million in deferred tax liabilities. 17. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2000 1999 1998 L.'000 L.'000 L.'000 - -------------------------------------------- -------- -------- -------- (Decrease)/increase in cash (40,179) 98,515 (3,477) Cash (inflow) from client cash (17,883) (33,818) (7,715) Cash inflow/(outflow) from cash equivalents 172,361 (6,852) 33,833 Cash (outflow)/inflow from debt and lease financing (515) 822 415 Cash (inflow)/outflow from bank loans (51,401) 108,290 (218,195) Cash (outflow) from bank overdrafts -- (47,578) 44,676 - -------------------------------------------- -------- -------- -------- Change in net debt resulting from cash flows 62,383 119,379 (150,463) - -------------------------------------------- -------- -------- -------- Debt and finance leases (195,946) (664) (309,765) Translation difference (46,412) (24,005) 15,630 - -------------------------------------------- -------- -------- -------- Change in net debt resulting from non-cash changes and translation (242,358) (24,669) (294,135) - -------------------------------------------- -------- -------- -------- Movement in net debt in the year (179,975) 94,710 (444,598) Net debt beginning of the year (512,615) (607,325) (162,727) - -------------------------------------------- -------- -------- -------- Net debt end of the year (692,590) (512,615) (607,325) - ------------------------------------------------------------------------------------
F-15 68 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 18. ANALYSIS OF NET DEBT
Non-cash December 31, changes and December 31, 1999 Cash flow translation 2000 2000 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------------------------------------------ Net cash: Cash at bank and in hand, including acquisitions of L.171,175,000 189,732 140,497 11,844 342,073 Less: cash equivalents, including acquisitions of L.102,008,000 (63,389) (172,361) (14,202) (249,952) Bank overdrafts, including acquisitions of L.5,933,000 -- (8,315) (138) (8,453) - ------------------------------------------------------------------------------------------ 126,343 (40,179) (2,496) 83,668 Client cash (41,533) (17,883) 1,077 (58,339) - ------------------------------------------------------------------------------------------ 84,810 (58,062) (1,419) 25,329 Cash equivalents 63,389 172,361 14,202 249,952 Debt due within one year -- -- (6,839) (6,839) Debt due after more than one year (659,120) (51,401) (249,502) (960,023) Finance leases (1,694) (515) 1,200 (1,009) - ------------------------------------------------------------------------------------------ Total (512,615) 62,383 (242,358) (692,590) - ------------------------------------------------------------------------------------------
Non-cash December 31, changes and December 31, 1998 Cash flow translation 1999 1999 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------------------------------------------ Net cash: Cash at bank and in hand 119,651 67,134 2,947 189,732 Less: cash equivalents (67,960) 6,852 (2,281) (63,389) Bank overdrafts (24,651) 24,529 122 -- - ------------------------------------------------------------------------------------------ 27,040 98,515 788 126,343 Client cash (7,715) (33,818) -- (41,533) - ------------------------------------------------------------------------------------------ 19,325 64,697 788 84,810 Cash equivalents 67,960 (6,852) 2,281 63,389 Debt due within one year (7,195) 6,494 701 -- Debt due after more than one year (686,010) 54,218 (27,328) (659,120) Finance leases (1,405) 822 (1,111) (1,694) - ------------------------------------------------------------------------------------------ Total (607,325) 119,379 (24,669) (512,615) - ------------------------------------------------------------------------------------------
Non-cash December 31, changes and December 31, 1998 Cash flow translation 1999 1998 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------------------------------------------ Net cash: Cash at bank and in hand, including cash acquired on acquisition of L.8,095,000 70,681 51,983 (3,013) 119,651 Less: cash equivalents, including cash equivalents acquired on acquisition of L.108,393,000 (35,250) (33,833) 1,123 (67,960) Bank overdrafts, including bank overdrafts acquired on acquisition of L.22,703,000 (2,556) (21,627) (468) (24,651) - ------------------------------------------------------------------------------------------ 32,875 (3,477) (2,358) 27,040 Client cash -- (7,715) -- (7,715) - ------------------------------------------------------------------------------------------ 32,875 (11,192) (2,358) 19,325 Cash equivalents 35,250 33,833 (1,123) 67,960 Debt due within one year (25,991) 10,419 8,377 (7,195) Debt due after more than one year (203,598) (183,938) (298,474) (686,010) Finance leases (1,263) 415 (557) (1,405) - ------------------------------------------------------------------------------------------ Total (162,727) (150,463) (294,135) (607,325) - ------------------------------------------------------------------------------------------
F-16 69 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 19. CALLED UP SHARE CAPITAL AND EXCHANGEABLE SHARES
Ordinary Shares - ---------------------------------------------------------------------------------- Number 2000 Number 1999 '000 L.'000 '000 L.'000 - -------------------------------------- ------------------- ----------------- Authorised ordinary shares of 25p each 1,050,000 262,500 850,800 212,700 - -------------------------------------- ------------------- ----------------- Allotted, called up and fully paid ordinary shares of 25p each 771,038 192,759 674,468 168,617 - ----------------------------------------------------------------------------------
As of December 31, 2000 ordinary shares are reserved for the following purposes:
Last Shares Prices expiry date ----------------------------------------- Options arising from acquisitions 6,875,648 25p - 1408p Feb 2010 Conversion of ESDs 6,180,859 -- Aug 2003 Conversion of exchangeable shares 43,559,501 -- Dec 2009 Subscription agreement (options) with the Employee Share Option Trust 53,000,000 153p - 1680p Dec 2009 Options granted under Sharesave Schemes 2,592,041 334p - 612p Apr 2005 - --------------------------------------------------------------------------------------
During the year the Company has issued 7,761,031 ordinary shares as a result of options exercised. Exchangeable Shares The exchangeable shares issued by a subsidiary of the Company are exchangeable into ordinary shares of the Company on a one-for-one basis at any time at the request of the holder. They have, as nearly as practicable, the economic equivalence of the Company's ordinary shares, including the same voting and dividend rights as the ordinary shares. The Company can redeem all outstanding exchangeable shares for ordinary shares after December 31, 2009, or earlier if the total exchangeable shares fall below 5 million. The exchangeable shares are included as part of share capital in the consolidated balance sheet to present a true and fair view of the consolidated Group's capital structure, which differs from the Companies Act 1985 requirements (to reflect these amounts as minority interests), as they will become and are equivalent to ordinary shares. Movements in exchangeable shares comprise:
Number - ----------------------------------------------- Issued August 1, 2000 21,377,158 Converted into ordinary shares (23,674,300) Converted from ESDs 45,856,643 - ----------------------------------------------- December 31, 2000 43,559,501 - -----------------------------------------------
20. COMMITMENTS AND CONTINGENCIES The Group operates a number of pension schemes throughout the world. All are defined contribution schemes with the exception of small schemes operating for employees in the UK, US, Hong Kong and Germany, which are defined benefit schemes. The assets of the defined benefit schemes are held in separate trustee administered funds. The pension costs and provisions of these schemes are assessed in accordance with the advice of professionally qualified actuaries. As of December 31, 2000 all plans are fully funded, with the exception of the German scheme, which is unfunded in accordance with local practice. The costs amounted to L.5,860,000 (1999: L.4,791,000, 1998: L.3,774,000) for the defined benefit schemes and L.27,836,000 (1999: L.17,649,000, 1998: L.13,677,000) for the defined contribution schemes. F-17 70 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Group's annual commitments under non-cancelable operating leases are as follows:
Land and buildings Other ------------------------ ----------------------- 2000 1999 1998 2000 1999 1998 Operating leases which expire: L.'000 L.'000 L.'000 L.'000 L.'000 L.'000 - ---------------------------------- ------------------------ ----------------------- Within one year 407 1,439 1,932 402 424 277 Within two to five years inclusive 16,810 11,960 9,683 3,548 3,291 1,895 In more than five years 13,856 8,676 4,535 1,292 1,723 -- - ---------------------------------- ------------------------ ----------------------- 31,073 22,075 16,150 5,242 5,438 2,172 - ----------------------------------------------------------------------------------------
The majority of the leases of land and buildings are subject to rent reviews. Guarantees and contingencies may arise in the ordinary course of business. In the normal course of business, the Group is subject to various litigation matters; however, in management's opinion, there are no legal proceedings pending against the Company, which would have a material adverse effect on its financial position, results of operations or liquidity. 21. FINANCIAL INSTRUMENTS The interest rate profile of the financial liabilities of the Group on December 31 was:
2000 - -------------------------------------------------------------------------------------------- Fixed rate financial liabilities --------------------------------- Weighted Weighted average period average for which Total Floating rate Fixed rate interest rate rate is fixed Currency L.'000 L.'000 L.'000 % Years - -------------------------------------------------------------------------------------------- US dollar 458,679 -- 458,679 6.5 3.6 Sterling 429,073 429,073 -- -- -- Euro 12,454 -- 12,454 6.5 2.0 Canadian dollar 67,115 -- 67,115 6.0 4.6 Japanese yen 550 -- 550 2.0 2.3 - -------------------------------------------------------------------------------------------- 967,871 429,073 538,798 6.5 3.7 - --------------------------------------------------------------------------------------------
1999 - -------------------------------------------------------------------------------------------- Fixed rate financial liabilities --------------------------------- Weighted Weighted average period average for which Total Floating rate Fixed rate interest rate rate is fixed Currency L.'000 L.'000 L.'000 % Years - -------------------------------------------------------------------------------------------- US dollar 646,824 228,066 418,758 6.5 4.6 DM 12,851 -- 12,851 6.5 3.0 Sterling 219 -- 219 11.0 1.5 Other 920 -- 920 2.8 3.3 - -------------------------------------------------------------------------------------------- 660,814 228,066 432,748 6.5 4.5 - --------------------------------------------------------------------------------------------
F-18 71 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Group held the following financial assets as of December 31:
2000 1999 L.'000 L.'000 - ------------------------ ------- ------- Cash deposits: - -------------- US dollar 137,125 88,689 Sterling 118,687 29,685 Canadian dollar 34,847 -- Euro 36,149 31,029 Japanese yen 4,736 21,090 Other 10,529 19,239 Debt securities: - ---------------- Euro 44,676 43,083 Treasury bills and other 12,630 2,239 - ------------------------ ----------------- Total 399,379 235,054 - --------------------------------------------
The cash deposits comprise deposits placed primarily in money market accounts and 7-day deposits. All the investments in debt securities are in fixed rate securities. The average interest rate on the euro securities is 5.0%, and the average time for which the rate is fixed is 0.1 years. The average interest rate on the treasury bills is 8.0% (1999: 5.71%), and average time for which the rate is fixed is 2.6 years (1999: 0.7 years). The Group has excluded debtors and creditors from its financial instrument disclosures. The majority of these amounts mature within three months, and there is no material interest rate gap on these amounts. There were no material differences between the book value and fair values of financial assets and liabilities at December 31, 2000 and 1999. F-19 72 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 22. RECONCILIATION TO US ACCOUNTING PRINCIPLES The Group prepares its consolidated accounts in accordance with generally accepted accounting principles ("GAAP") in the United Kingdom which differ in certain material respects from US GAAP. The following is a summary of material adjustments to profit and shareholders' funds which would be required if US Generally Accepted Accounting Principles ("US GAAP") had been applied instead of UK Generally Accepted Accounting Principles ("UK GAAP").
2000 1999 1998 Profit L.'000 $'000* L.'000 $'000* L.'000 $'000* - ------------------------------------------------------------------------------------------------------- Profit for the financial year (UK GAAP) 288,530 429,910 181,032 293,272 94,105 158,096 Acquisition accounting(a) (65,451) (97,522) (76,380) (123,736) (36,091) (60,633) Taxation(b) (45,127) (67,239) (14,578) (23,616) (13,613) (22,870) Other(e) 2,758 4,109 (2,040) (3,305) (150) (252) - ------------------------------------------------------------------------------------------------------- Net income (US GAAP) 180,710 269,258 88,034 142,615 44,251 74,341 Earnings per ordinary share: -basic 26.7p 13.8p 7.4p -diluted 25.6p 13.2p 7.0p Earnings per ordinary share before goodwill amortization: -basic 44.6p 29.2p 20.8p -diluted 42.6p 28.0p 19.5p Earnings per ADS**: -basic $ .80 $ .45 $ .25 -diluted $ .76 $ .43 $ .24 Earnings per ADS** before goodwill amortization: -basic $ 1.33 $ .95 $ .70 -diluted $ 1.27 $ .91 $ .66 - -------------------------------------------------------------------------------------------------------
2000 1999 Shareholders' funds L.'000 $'000 L.'000 $'000 - ------------------------------------------------------------------------------------- Shareholders' funds (UK GAAP) 2,103,080 3,133,589 436,661 707,391 Acquisition accounting(a) 1,020,052 1,519,877 993,765 1,609,899 Treasury stock(c) (168,292) (250,755) (132,615) (214,836) Dividends(d) 47,813 71,241 35,544 57,581 Other(e) 15,968 23,792 3,957 6,410 - ------------------------------------------------------------------------------------- Shareholders' equity (US GAAP) 3,018,621 4,497,744 1,337,312 2,166,445 - -------------------------------------------------------------------------------------
* Pounds sterling for the fiscal years ending December 31, 2000, 1999, and 1998 have been translated to US dollars using $1.49, $1.62, and $1.68, respectively, per L.1.00. ** Per share amounts in US dollars represent amounts per American Depositary Share, equivalent to 2 ordinary shares. (a) Acquisition accounting Under UK GAAP, goodwill arising on acquisitions prior to 1998 has been eliminated directly against reserves. Goodwill arising in 1998 and after is capitalized and amortized over a period of 20 years. Integration-related amounts were expensed directly to the profit and loss account. Under US GAAP, goodwill and other intangible assets are capitalized and amortized over a period of 20 years. The integration costs were either capitalized as goodwill or expensed to the profit and loss account in the year paid. F-20 73 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (b) Taxation The taxation adjustment primarily relates to differences in the financial statement treatments of stock option deductions under UK and US GAAP. Under UK GAAP, current tax expense is reduced by the tax benefit of the stock option deduction. Under US GAAP, the tax benefit is written off directly to equity. The deferred taxation adjustment primarily relates to the difference in the recognition of deferred tax assets under UK and US GAAP. UK GAAP utilizes a "partial provisioning" approach which does not allow for the recognition of replaceable deferred assets (assets which will reverse in the next accounting period but are replaced with a similar asset). US GAAP does not have such a provision, instead allowing a "full provisioning" approach. In addition, certain intangibles are treated as deferred tax items for US GAAP that are permanent items under UK GAAP. (c) Treasury stock Under UK GAAP, shares held by the ESOT are reflected as investments. Additionally, the trust related to the Global Stock Plan is not consolidated with the Group. Under US GAAP, shares held by the ESOT and the Global Stock Plan trust are reflected as treasury stock. (d) Dividends Under UK GAAP, ordinary dividends proposed after the end of an accounting period are deducted in arriving at retained earnings for that period. Under US GAAP, dividends are not recorded until formally approved. (e) Other Other adjustments include accounting differences relating to pension costs, interval fund amortization, loans of employee stock ownership plans, and deferred taxation. 23. GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS The 6.375% senior notes due 2003 and 6.6% senior notes due 2005, which were issued in connection with the GT Global acquisition, and which have an aggregate principal amount of $650 million, are fully and unconditionally guaranteed as to payment of principal, interest and any other amounts due thereon by the following wholly owned subsidiaries: AIM Management Group, Inc., AIM Advisors, Inc., INVESCO, Inc., INVESCO North American Holdings, Inc., and INVESCO Capital Management, Inc. (the "Guarantors"). Presented below are condensed consolidating financial statements of the Company for the years ended December 31, 2000, 1999, and 1998. Prior year disclosures have been restated to reflect the internal reorganization of INVESCO Inc., which occurred at the beginning of 2000. F-21 74 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING BALANCE SHEET AND RECONCILIATION OF SHAREHOLDERS' FUNDS FROM UK TO US GAAP
2000 Consolidated Guarantor Non-guarantor AMVESCAP PLC elimination Consolidated subsidiaries subsidiaries parent company entries total L.'000 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------------------------------------------------------------------- Fixed assets 606,049 2,509,058 2,394,967 (2,778,670) 2,731,404 Current assets 181,283 1,327,418 55,653 -- 1,564,354 Creditors: amounts falling due within one year (127,629) (964,152) (82,344) -- (1,174,125) Intercompany balances (131,948) (12,277) 144,225 -- -- Creditors: amounts falling due after more than one year (7,663) (124,316) (886,574) -- (1,018,553) - ------------------------------------------------------------------------------------------------------------------- Net assets/(liabilities) 520,092 2,735,731 1,625,927 (2,778,670) 2,103,080 - ------------------------------------------------------------------------------------------------------------------- Capital and reserves Called up share capital 2,823 34 192,759 (2,857) 192,759 Share premium account 627,850 1,355 1,488,933 (629,205) 1,488,933 Exchangeable shares -- 477,153 -- -- 477,153 Profit and loss account 361,718 626,951 593,420 (988,669) 593,420 Other reserves (472,299) 1,630,238 (649,185) (1,157,939) (649,185) - ------------------------------------------------------------------------------------------------------------------- Shareholders' funds under UK GAAP 520,092 2,735,731 1,625,927 (2,778,670) 2,103,080 - ------------------------------------------------------------------------------------------------------------------- Reconciliation to US accounting principles US GAAP adjustments: Acquisition accounting 65,731 954,321 1,020,052 -- 1,020,052 Treasury stock -- -- (168,292) -- (168,292) Dividends -- -- 47,813 -- 47,813 Other 9,393 6,575 15,968 -- 15,968 - ------------------------------------------------------------------------------------------------------------------- Shareholders' equity under US GAAP 595,216 3,696,627 2,541,468 -- 3,018,621 - -------------------------------------------------------------------------------------------------------------------
F-22 75 AMVESCAP PLC AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1999 Consolidated Guarantor Non-guarantor AMVESCAP PLC elimination Consolidated subsidiaries subsidiaries parent company entries total L.'000 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------------------------------------------------------------------- Fixed assets 571,386 705,004 761,853 (1,137,166) 901,077 Current assets 164,621 732,074 29,028 -- 925,723 Creditors: amounts falling due within one year (83,005) (578,653) (44,631) -- (706,289) Intercompany balances (272,357) (64,322) 336,679 -- -- Creditors: amounts falling due after more than one year (17,479) (20,103) (646,268) -- (683,850) - ------------------------------------------------------------------------------------------------------------------- Net assets/(liabilities) 363,166 774,000 436,661 (1,137,166) 436,661 - ------------------------------------------------------------------------------------------------------------------- Capital and reserves Called up share capital 3,780 (64) 168,617 (3,716) 168,617 Share premium account 703,021 (369,246) 478,860 (333,775) 478,860 Profit and loss account 156,542 398,517 380,717 (555,059) 380,717 Other reserves (500,177) 744,793 (591,533) (244,616) (591,533) - ------------------------------------------------------------------------------------------------------------------- Shareholders' funds under UK GAAP 363,166 774,000 436,661 (1,137,166) 436,661 - ------------------------------------------------------------------------------------------------------------------- Reconciliation to US accounting principles US GAAP adjustments: Acquisition accounting 67,167 926,598 993,765 993,765 Treasury stock -- -- (132,615) (132,615) Dividends -- -- 35,544 35,544 Other (776) 4,733 3,957 3,957 - ------------------------------------------------------------------------------------------------------------------- Shareholders' equity under US GAAP 429,557 1,705,331 1,337,312 1,337,312 - -------------------------------------------------------------------------------------------------------------------
F-23 76 AMVESCAP PLC AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENT OF PROFIT AND LOSS AND RECONCILIATION OF NET INCOME FROM UK TO US GAAP
2000 Consolidated Guarantor Non-guarantor AMVESCAP PLC elimination Consolidated subsidiaries subsidiaries parent company entries total L.'000 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------------------------------------------------------------------- Revenues 747,903 880,759 -- -- 1,628,662 Operating expenses (375,037) (666,119) 1,405 -- (1,039,751) - ------------------------------------------------------------------------------------------------------------------- Operating profit 372,866 214,640 1,405 -- 588,911 Other net income/(expense) (70,594) (80,605) 8,521 -- (142,678) - ------------------------------------------------------------------------------------------------------------------- Profit before taxation 302,272 134,035 9,926 -- 446,233 Taxation (85,820) (67,785) (4,098) -- (157,703) - ------------------------------------------------------------------------------------------------------------------- Profit for the financial year 216,452 66,250 5,828 -- 288,530 Share of profits of Subsidiaries 94,105 216,452 282,702 (593,259) -- - ------------------------------------------------------------------------------------------------------------------- Net income under UK 310,557 282,702 288,530 (593,259) 288,530 GAAP, (equity method) Reconciliation to US Accounting principles US GAAP adjustments: Acquisition accounting (7,974) (57,477) (65,451) (65,451) Taxation (39,737) (5,390) (45,127) (45,127) Other 2,758 -- 2,758 2,758 - ------------------------------------------------------------------------------------------------------------------- Net income under US GAAP 265,604 219,835 180,710 180,710 - -------------------------------------------------------------------------------------------------------------------
1999 Consolidated Guarantor Non-guarantor AMVESCAP PLC elimination Consolidated subsidiaries subsidiaries parent company entries total L.'000 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------------------------------------------------------------------- Revenues 538,188 534,162 -- -- 1,072,350 Operating expenses (269,195) (449,032) (1,410) -- (719,637) - ------------------------------------------------------------------------------------------------------------------- Operating profit 268,993 85,130 (1,410) -- 352,713 Other net income/(expense) (55,555) (20,745) 6,629 -- (69,671) - ------------------------------------------------------------------------------------------------------------------- Profit before taxation 213,438 64,385 5,219 -- 283,042 Taxation (72,022) (28,131) (1,857) -- (102,010) - ------------------------------------------------------------------------------------------------------------------- Profit for the financial year 141,416 36,254 3,362 -- 181,032 Share of profits of subsidiaries 50,411 141,416 177,670 (369,497) -- - ------------------------------------------------------------------------------------------------------------------- Net income under UK 191,827 177,670 181,032 (369,497) 181,032 GAAP, (equity method) Reconciliation to US accounting principles US GAAP adjustments: Acquisition accounting (7,480) (68,900) (76,380) (76,380) Taxation (11,159) (3,419) (14,578) (14,578) Other (2,040) -- (2,040) (2,040) - ------------------------------------------------------------------------------------------------------------------- Net income under US GAAP 171,148 105,351 88,034 88,034 - -------------------------------------------------------------------------------------------------------------------
F-24 77 AMVESCAP PLC AND SUBSIDIARIES
1998 Consolidate Guarantor Non-guarantor AMVESCAP PLC elimination Consolidated subsidiaries subsidiaries parent company entries total L.'000 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------------------------------------------------------------------- Revenues 413,495 388,677 -- -- 802,172 Operating expenses (223,425) (320,187) (1,244) -- (544,856) - ------------------------------------------------------------------------------------------------------------------- Operating profit 190,070 68,490 (1,244) -- 257,316 Other net (expense)/income (61,013) (43,786) 8.961 -- (95,838) - ------------------------------------------------------------------------------------------------------------------- Profit before taxation 129,057 24,704 7,717 -- 161,478 Taxation (39,729) (25,258) (2,386) -- (67,373) - ------------------------------------------------------------------------------------------------------------------- Profit for the financial year 89,328 (554) 5,331 -- 94,105 Share of profits of Subsidiaries 32,742 89,328 88,774 (210,844) -- - ------------------------------------------------------------------------------------------------------------------- Net income under UK 122,070 88,774 94,105 (210,844) 94,105 GAAP, (equity method) Reconciliation to US accounting principles US GAAP adjustments: Acquisition accounting (7,367) (28,724) (36,091) (36,091) Taxation (22,120) 8,507 (13,613) (13,613) Other (1,773) 1,623 (150) (150) - ------------------------------------------------------------------------------------------------------------------- Net income under US GAAP 90,810 70,180 44,251 44,251 - -------------------------------------------------------------------------------------------------------------------
F-25 78 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
2000 Consolidated Guarantor Non-guarantor AMVESCAP PLC elimination Consolidated subsidiaries subsidiaries parent company entries total L.'000 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------------------------------------------------------------------- Net cash inflow from 306,422 108,126 166,420 -- 580,968 operating activities Banking and insurance activities -- 5,795 -- -- 5,795 Net cash (outflow)/inflow from returns on investments and servicing of finance (42,705) 124,858 82,736 (198,164) (33,275) Taxation (123,907) (2,300) 10,449 -- (115,758) Net cash (outflow)/inflow from capital expenditure and financial investment (37,593) (43,714) 7,147 -- (74,160) Acquisitions and disposals -- -- (235,321) -- (235,321) Dividends paid (128,688) (69,476) (63,558) 198,164 (63,558) Net cash (outflow)/inflow from financing (275) 8,216 67,865 -- 75,806 Change in bank overdrafts -- (8,315) -- -- (8,315) Change in cash equivalents 20,664 (151,963) (41,062) -- (172,361) - ------------------------------------------------------------------------------------------------------------------- (Decrease)/increase in cash (6,082) (28,773) (5,324) -- (40,179) - -------------------------------------------------------------------------------------------------------------------
1999 Consolidated Guarantor Non-guarantor AMVESCAP PLC elimination Consolidated subsidiaries subsidiaries parent company entries total L.'000 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------------------------------------------------------------------- Net cash inflow/(outflow) from 284,262 (46,981) 132,464 -- 369,745 operating activities Banking and insurance activities -- (3,698) -- -- (3,698) Net cash (outflow)/inflow from returns on investments and servicing of finance (34,440) 151,932 45,644 (194,161) (31,025) Taxation (71,569) 22,029 (6,914) -- (56,454) Net cash (outflow)/inflow from capital expenditure and financial investment (31,628) 40,815 (59,483) -- (50,296) Dividends paid (150,666) (43,495) (54,394) 194,161 (54,394) Net cash outflow from financing (257) (54,126) (52,361) -- (106,744) Change in bank overdrafts -- 24,529 -- -- 24,529 Change in cash equivalents 4,794 2,058 -- -- 6,852 - ------------------------------------------------------------------------------------------------------------------- Increase in cash 496 93,063 4,956 -- 98,515 - -------------------------------------------------------------------------------------------------------------------
F-26 79 AMVESCAP PLC AND SUBSIDIARIES
1998 Consolidated Guarantor Non-guarantor AMVESCAP PLC elimination Consolidated subsidiaries subsidiaries parent company entries total L.'000 L.'000 L.'000 L.'000 L.'000 - ------------------------------------------------------------------------------------------------------------------- Net cash inflow/(outflow) from 240,092 (70,009) (35,617) -- 134,466 operating activities Banking and insurance activities -- 25,395 -- -- 25,395 Net cash (outflow)/inflow from returns on investments and servicing of finance (29,826) 70,056 62,821 (126,457) (23,406) Taxation (65,653) 15,064 (9,522) -- (60,111) Net cash (outflow)/inflow from capital expenditure and financial investment (39,313) 200,623 (234,660) -- (73,350) Net cash inflow/(outflow) related to acquisitions -- 89,344 (216,303) -- (126,959) Dividends paid (102,389) (24,068) (44,410) 126,457 (44,410) Net cash inflow/(outflow) from financing 2,494 (255,349) 473,213 -- 220,358 Change in bank overdrafts -- (21,627) -- -- (21,627) Change in cash equivalents (4,364) (29,469) -- -- (33,833) - -------------------------------------------------------------------------------------------------------------------- Increase/(decrease) in cash 1,041 (40) (4,478) -- (3,477) - --------------------------------------------------------------------------------------------------------------------
F-27 80 SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, AMVESCAP hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf on May 17, 2001. AMVESCAP PLC /s/ ROBERT F. MCCULLOUGH ---------------------------------------------- Robert F. McCullough Chief Financial Officer 50 81 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 1.1 Articles of Organization of AMVESCAP, incorporated by reference to exhibit 3.1 to AMVESCAP's Registration Statement on Form F-3/F-1 (file nos. 333-5990 and 333-5990-01) filed with the Securities and Exchange Commission on November 21, 1996. 1.2 Memorandum of Association of AMVESCAP, incorporated by reference to exhibit 3.1 to AMVESCAP's Registration Statement on Form F-1 (file no. 33-95456) filed with the Securities and Exchange Commission on August 22, 1995. 1.3 Articles of Association of AMVESCAP, adopted on August 1, 2000. 2.1 Form of Certificate for Ordinary Shares of AMVESCAP, incorporated by reference to exhibit 4.5 to AMVESCAP's Registration Statement on Form F-3/F-1 (file nos. 33-5990 and 33-5990-01), filed with the Securities and Exchange Commission on November 21, 1996. 2.2 Form of Certificate for American Depositary Shares, representing two Ordinary Shares. 2.3 Amended and Restated Deposit Agreement, dated as of November 8, 2000, among AMVESCAP, The Bank of New York and the holders of American Depositary Receipts issued thereunder. 4.1 Standstill Agreement, dated as of November 4, 1996, by and among AMVESCAP and the shareholders named therein, incorporated by reference to exhibit 2.3 to AMVESCAP's Registration Statement on Form F-3/F-1 (file nos. 33-5990 and 33-5990-01), filed with the Securities and Exchange Commission on November 21, 1996. 4.2 Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein and A I M Management Group Inc., incorporated by reference to exhibit 2.4 to AMVESCAP's Registration Statement on Form F-3/F-1 (file nos. 33-5990 and 33-5990-01), filed with the Securities and Exchange Commission on November 21, 1996. 4.3 Amended and Restated Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein
82 and A I M Management Group Inc., incorporated by reference to exhibit 2.14 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1996, filed with the Securities and Exchange Commission on May 6, 1997. 4.4 Waiver, dated as of February 28, 1997, regarding the Amended and Restated Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein and A I M Management Group Inc., incorporated by reference to exhibit 2.15 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1996, filed with the Securities and Exchange Commission on May 6, 1997. 4.5 Waiver, dated as of May 1998, regarding the Amended and Restated Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein and A I M Management Group Inc., incorporated by reference to exhibit 1.1 to Amendment No. 1 to AMVESCAP's Registration Statement on Form F-3 (file no. 333-8680), filed with the Securities and Exchange Commission on May 21, 1998. 4.6 Waiver, dated as of September 29, 1998, regarding the Amended and Restated Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein and A I M Management Group Inc., incorporated by reference to exhibit 3.12 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1998, filed with the Securities and Exchange Commission on March 30, 1999. 4.7 Announcement of Waiver, dated as of November 22, 2000, regarding the Amended and Restated Transfer Restriction Agreement, dated as of November 4, 1996, by and among AMVESCAP, the shareholders named therein, the option holders named therein, the spouses of the shareholders and option holders named therein and A I M Management Group Inc., incorporated by reference to AMVESCAP's Report of Foreign Private Issuer filed on Form 6-K, filed with the Securities and Exchange Commission on November 22, 2000. 4.8 Registration Rights Agreement, dated as of February 28, 1997, by and among AMVESCAP and the former shareholders of A I M Management Group, Inc. named therein, incorporated by reference to exhibit 2.11 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1996, filed with the Securities and Exchange Commission on May 6, 1997. 4.9 Indemnification Agreement, dated as of February 28, 1997, by and among AMVESCAP, Charles T. Bauer, Robert H. Graham, Gary T. Crum and certain related persons named therein, incorporated by reference to exhibit 2.6 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1996, filed with the Securities and Exchange Commission on May 6, 1997. 4.10 Amended and Restated Credit Agreement, dated as of December 17, 1997, among AMVESCAP, as borrower, the lenders named therein, Citibank, N.A. and NationsBank, N.A., as co-syndication agents, and NationsBank, N.A., as funding agent, incorporated by reference to exhibit 3.17 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1997, filed with the Securities and Exchange Commission on April 27, 1998.
83 4.11 Letter Amendment No. 1, dated as of June 7, 2000, to Amended and Restated Credit Agreement, dated as of December 17, 1997, among AMVESCAP, as borrower, the lenders named therein, Citibank, N.A. and Bank of America, N.A., as co-syndication agents, and Bank of America, N.A., as funding agent. 4.12 Letter Amendment No. 2, dated as of October 19, 2000, to Amended and Restated Credit Agreement, dated as of December 17, 1997, among AMVESCAP, as borrower, the lenders named therein, Citibank, N.A. and Bank of America, N.A., as co-syndication agents, and Bank of America, N.A., as funding agent. 4.13 Letter Amendment No. 3, dated as of March 13, 2001, to Amended and Restated Credit Agreement, dated as of December 17, 1997, among AMVESCAP, as borrower, the lenders named therein, Citibank, N.A. and Bank of America, N.A., as co-syndication agents, and Bank of America, N.A., as funding agent. 4.14 Assumption of Guaranty from A I M Advisors, Inc., dated as of December 22, 1997, incorporated by reference to exhibit 3.18 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1997, filed with the Securities and Exchange Commission on April 27, 1998. 4.15 Assumption of Guaranty from A I M Management Group Inc., dated as of December 22, 1997, incorporated by reference to exhibit 3.19 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1997, filed with the Securities and Exchange Commission on April 27, 1998. 4.16 Guaranty from INVESCO, Inc., INVESCO North American Holdings, Inc. and INVESCO Capital Management, Inc., dated as of February 14, 1997. 4.17 Second Amended and Restated Purchase and Sale Agreement dated as of December 14, 2000, among A I M Management Group Inc., Citibank, N.A. and Citicorp North America, Inc. 4.18 Indenture, dated as of December 16, 1996, among LGT Asset Management, Inc., LGT Bank in Liechtenstein Aktiengesellschaft, and Citibank, N.A., incorporated by reference to exhibit 3.28 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1998, filed with the Securities and Exchange Commission on March 30, 1999. 4.19 First Supplemental Indenture, dated as of December 31, 1999, among INVESCO, Inc., LGT Bank in Lichetenstein Aktiengesellschaft, and Citibank, N.A. 4.20 Loan Agreement, dated December 14, 1995, between LGT BIL Ltd. and Bank in Liechtenstein Aktiengesellschaft, incorporated by reference to exhibit 3.29 to AMVESCAP's Annual Report on Form 20-F for the year ended December 31, 1998, filed with the Securities and Exchange Commission on March 30, 1999. 4.21 Indenture, dated as of May 7, 1998, for AMVESCAP's Senior Exchange Notes due 2003 and 2005, among AMVESCAP, A I M Management Group, Inc., A I M Advisors, Inc., INVESCO, Inc., INVESCO North American Holdings, Inc. and INVESCO Capital Management, Inc., as initial securities guarantors, and SunTrust Bank, Atlanta, as trustee, incorporated by reference to exhibit 4.1 to AMVESCAP's Registration Statement on Form F-4 (file no. 333-8954) filed with the Securities and Exchange Commission on June 15, 1998. 4.22 AMVESCAP Deferred Fees Share Plan.
84 4.23 Amended and Restated Merger Agreement, dated as of May 9, 2000, between AMVESCAP and Trimark. 4.24 Support Agreement, dated as of August 1, 2000, between AMVESCAP, AVZ Callco Inc., and AMVESCAP Inc. 4.25 Voting and Exchange Trust Agreement, dated as of August 1, 2000, between AMVESCAP, AMVESCAP Inc. and CIBC Mellon Trust Company. 4.26 Indenture, dated August 1, 2000, among AMVESCAP Inc., AMVESCAP and CIBC Mellon Trust Company. 4.27 Final Offer Document, dated October 19, 2000, for Cash and Share Offer by Schroder Salomon Smith Barney on behalf of AMVESCAP PLC to acquire all of the issued share capital of Perpetual plc, incorporated by reference to AMVESCAP's Report of Foreign Private Issuer filed on Form 6-K, filed with the Securities and Exchange Commission on November 6, 2000. 4.28 Merger Agreement, dated as of February 28, 2001, among National Asset Management Corporation, the Sellers listed therein, the Option Holder listed therein, AMVESCAP and AVZ, Inc.
EX-1.3 2 h86436ex1-3.txt ARTICLES OF ASSOCIATION 1 EXHIBIT 1.3 COMPANY NO. 308372 THE COMPANIES ACT 1985 ---------- COMPANY LIMITED BY SHARES ---------- ARTICLES OF ASSOCIATION - of - AMVESCAP PLC (Adopted on 1 August 2000 by Special Resolution passed on 20th July 2000) ---------- TABLE A 1. The regulations in Table A in the Schedule to the Companies (Tables A to F) Regulations 1985 and in any Table A applicable to the Company under any former enactment relating to companies shall not apply to the Company except in so far as they are repeated or contained in these presents. INTERPRETATION 2. In the presents if not inconsistent with the subject or context:- The words standing in the first column of the following Table shall bear the meaning set opposite to them respectively in the second column thereof. WORDS MEANINGS "Debentures" the 6% equity subordinated debentures of C$1000 principal amount each issued by Exchangeco and convertible into Exchangeable Shares. "Exchangeco" AMVESCAP Inc. a corporation incorporated under the laws of the province of Nova Scotia in Canada and an indirect wholly owned subsidiary of the Company. "Exchangeable Shares" shares issued or to be issued from time to time by Exchangeco which are exchangeable on a one for one basis into Ordinary Shares of the Company. 1 2 "The Statutes" every United Kingdom statute (including any orders, regulations or other subordinate legislation made under it) from time to time in force concerning companies insofar as it applies to the Company. "These presents" these Articles of Association as now framed or as from time to time altered by special resolution. "The Office" the Registered Office of the Company. "The Seal" the Common Seal of the Company. "The United Kingdom" Great Britain and Northern Ireland. "The Board" the Board of Directors of the Company or the Directors present at a duly convened meeting of Directors (or duly authorised committee thereof) at which a quorum is present. "The Register" the Register of Members of the Company. "In writing" written or produced by any substitute for writing, or partly written and partly so produced including (without prejudice) printing, lithography, typewriting, photography, and other modes of representing or reproducing words in visible form. "Paid up" paid up or credited as paid up. "The Prescribed Rate" an annual rate of interest equal to two per cent. above the Base Lending Rate (or any equivalent thereof or successor thereto) published from time to time by Midland Bank PLC in London being the Base Lending Rate in effect at the close of business in London on the date immediately preceding the day on which such rate falls to be determined. "Trustee" CIBC Mellon Trust Company or any successor or replacement trustee from time to time appointed pursuant to the Voting and Exchange Trust Agreement. Words importing the singular number only shall include the plural number and vice versa; Words importing the masculine gender only shall include the feminine gender; Words importing persons shall include corporations; The expressions "debenture" and "debenture holder" shall include debenture stock and debenture stockholder; 2 3 The expression "the Secretary" shall include a temporary or assistant Secretary and any person appointed by the Board to perform any of the duties of the Secretary; The expression "dividend" shall include bonus; Reference to any provision of any act shall extend to and include any amendment or re-enactment of or substitution for the same effected by any subsequent statute; Anything which may be done by or with the sanction of an Ordinary Resolution may also be done by or with the sanction of a Special Resolution. 3. Subject to the last preceding Article, any words or expressions defined in the Statutes shall, if not inconsistent with the subject or context, bear the same meaning in these presents. BUSINESS 4. Any branch or kind of business which the Company is either expressly or by implication authorised to undertake may be undertaken by the Board at such time or times as it shall think fit, and further may be suffered by it to be in abeyance, whether such branch or kind of business may have been actually commenced or not, so long as the Board may deem it expedient not to commence or proceed with the same. OFFICE 5. The Office shall be at such place in England or Wales as the Board shall from time to time appoint. SHARE CAPITAL 6. (A)The authorised share capital of the Company at the date of the adoption of these Articles is (pound)262,500,000 divided into 1,049,999,999 Ordinary Shares of 25p each and one special voting share of 25 pence (the "Special Voting Share"). (B)The following provisions of this Article 6 contain the rights, privileges, and restrictions attaching to the Special Voting Share and all the other provisions of these Articles are to be read and construed subject to them: (a) The Special Voting Share shall not carry any right to receive dividends or distributions. (b) The holder of the Special Voting Share shall have the right to receive notice of and to attend and vote at any general meeting of the Company as follows: (i) On a show of hands, the holder of the Special Voting Share, or its proxy, shall have one vote in addition to any votes which may be cast by a holder of Exchangeable Shares (other than the Company and its subsidiaries) (a "Beneficiary") (or its nominee) on such show of hands as proxy for the holder of the Special Voting Share in accordance with Article 6(B)(b)(iv) below; 3 4 (ii) On a poll, the holder of the Special Voting Share shall have one vote for every four Exchangeable Shares then outstanding (a) that are owned by Beneficiaries and (b) as to which the holder of the Special Voting Share confirms to the Company that it has received voting instructions from the Beneficiaries. Votes may be given either personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way. (iii) The holder of the Special Voting Share shall be entitled to demand that a poll be taken on any resolution, whether before or after a show of hands, and to this extent Article 71 is amended and varied. (iv) If so instructed by a Beneficiary, the holder of the Special Voting Share shall appoint that Beneficiary, or such other person as that Beneficiary nominates, as proxy to attend and to exercise personally in place of the holder of the Special Voting Share (A) on a poll, one vote for every four Exchangeable Shares held by the Beneficiary, and (B) on a show of hands one vote (the "Beneficiary Votes"). A proxy need not be a member of the Company. A Beneficiary (or his nominee) exercising its Beneficiary Votes shall have the same rights as the holder of the Special Voting Share to speak at the meeting in favour of any matter and to vote on a show of hands or on a poll in respect of any matter proposed, and to this extent Article 77 is amended and varied. (c) The holder of the Special Voting Share may, by service of notice by the Company, be required to require any Beneficiary or any person whom the holder of the Special Voting Share and/or Exchangeco know or have reason to believe to hold any interest whatsoever in an Exchangeable Share to confirm to the Company that fact or to give to the Company such details as to who holds an interest in such Exchangeable Share as would be required if the Exchangeable Shares were Ordinary Shares and that the Beneficiary had been duly served with a notice under section 212 of the Companies Act 1985 (as amended) as referred to in Article 78(B). If the Beneficiary fails to respond within the prescribed period then the provisions of Article 78(B) shall apply to that Beneficiary. (d) Subject as aforesaid, or except as otherwise required by applicable law, the Special Voting Share and the Ordinary Shares shall constitute one class. (e) In the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, the holder of the Special Voting Share shall be entitled to receive out of the assets of the Company available for distribution to the shareholders of the Company, an amount equal to 25 pence before any distribution is made on the Ordinary Shares or any other shares ranking junior to the Special Voting Share as to distribution of assets upon voluntary or involuntary liquidation. After payment of such amount the holder of the Special Voting Share shall not be entitled to any further participation in any distribution of assets of the Company. (f) The Special Voting Share shall not be subject to redemption by the Company or at the option of its holder, except that at such time as no Exchangeable Shares (other than Exchangeable Shares owned by the Company or its subsidiaries) and no Debentures shall be outstanding, the Special Voting Share shall automatically be redeemed and cancelled, with an amount of 25 pence due and payable upon such 4 5 redemption, and the Board is hereby authorised to take all (if any) such steps as may be necessary or desirable to effect such redemption and cancellation. (g) The Special Voting Share shall rank senior to all Ordinary Shares. (h) The Company may not, without the consent of the holder of the Special Voting Share, issue any special voting shares in addition to the Special Voting Share and no other term of the Special Voting Share shall be amended, except with the approval of the holder of the Special Voting Share. 7. Without prejudice to any special rights conferred on the holders of any shares or class of shares, any share in the Company may be issued with or have attached thereto such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as the Company may from time to time by Ordinary resolution determine (or, in the absence of any such determination, as the Board may determine). 8. Subject to the provisions of the Statutes any Shares may be issued on the terms that they are, or at the option of the Company or holders thereof are to be liable, to be redeemed on such terms and in such manner as may be provided by these presents. 9. Subject to the provisions of the Statutes, the Company may, with the sanction by an extraordinary resolution passed at a separate class meeting of the holders of any class of convertible shares of the Company, purchase its own shares (including any redeemable shares). The sanction of the holders of any class of convertible shares of the Company referred to in this Article may be general or specific. 10. Except and insofar as permitted by the Statutes, the Company shall not give any financial assistance for the acquisition of shares in the Company or make any loan to any of the Directors or to any director of a company which is its holding company or enter into any guarantee or provide any security in connection with any such loan. MODIFICATION OF RIGHTS 11. Subject to the provisions of Statutes, all or any of the special rights and privileges for the time being attached to any class of shares for the time being issued may from time to time (whether or not the Company is being wound up) be altered or abrogated with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of such shares. To any such separate general meeting all the provisions of these presents as to general meetings of the Company shall mutatis mutandis apply, but so that the necessary quorum shall be one person at least holding or representing by proxy not less than one-third of the issued shares of the class that every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him, and that if at any adjourned meeting of such holders a quorum as above defined be not present those of such holders who are present shall be a quorum. 12. The special rights conferred on the holders of any shares or class of shares shall not unless expressly provided by the terms and conditions from time to time attached to such 5 6 shares be deemed to be altered by the creation of or issue of further shares ranking in priority to or pari passu therewith. SHARES 13. The Company may exercise the powers of paying commissions conferred by the Statutes. Provided that the rate or amount of the commission paid or agreed to be paid shall be disclosed in the manner required by the Statutes, and that such commission shall not exceed 10 per cent of the price at which the shares in respect whereof the same is paid are issued or an amount equal to 10 per cent of such price (as the case may be). Such commission may be satisfied by the payment of cash or the allotment of fully or partly paid shares or partly in one way and partly in the other. The Company may also on any issue of shares pay such brokerage as may be lawful. 14. Save as otherwise provided in the Statutes or in these presents all unissued shares (whether forming part of the original or any increased capital) shall be at the disposal of the Board who may (subject to the provisions of the Statutes) allot, grant options over, offer or otherwise deal with or dispose of them to such persons at such times and generally on such terms and conditions as they may determine. 15. Except as ordered by a Court of competent jurisdiction or as by law or these presents required, no person shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or any other right in respect of any share except an absolute right to the entirety thereof in the registered holder. SHARE CERTIFICATES 16. (A) (i) Subject to Article 16(A)(ii) below, the certificates of title to shares shall be issued under the Seal or under the official seal kept by the Company by virtue of Section 40 of the Companies Act 1985 and shall specify the number and class and the distinguishing number (if any) of the shares to which it relates and the amount paid up thereon. No certificate shall be issued relating to shares of more than one class. (ii) Subject to the provisions of the Statutes and the regulations of The London Stock Exchange Limited, the Board may by resolution decide, either generally or in any particular case or cases, that certificates of title to shares need not be issued under a seal. (B) Every person (other than a stock exchange nominee in respect of whom the Company is not by law required to complete and have ready for delivery a certificate) whose name is entered as a Member in the Register shall be entitled, without payment, to receive within two months after allotment or lodgement of transfer (or within such other period as the conditions of issue shall provide) one certificate for all the shares registered in his name or, in the case of shares of more than one class being registered in his name, a separate certificate for each class of shares so registered, and where a Member transfers part of the shares of any class registered in his name he 6 7 shall be entitled without payment to one certificate for the balance of shares of that class retained by him. If a Member shall require additional certificates he shall pay for each additional certificate such reasonable sum (if any) as the Board may determine. The Board may, by resolution, disapply the provisions of this Article and Article 18 below to the extent permitted by the Statutes and the regulations of The London Stock Exchange Limited. 17. In respect of shares of one class held jointly by more than one person the Company shall not be bound to issue more than one certificate, and delivery of a certificate for such shares to the person first named on the Register in respect of such shares shall be sufficient delivery to all such holders. 18. If a share certificate be defaced, lost or destroyed it may be replaced and on such terms (if any) as to evidence and indemnity (with or without security) as the Board may think fit and, in the case of defacement, on delivery of the old certificate to the Company. 19. Every certificate issued under the last preceding Article shall be issued without payment but there shall be paid to the Company any exceptional out-of-pocket expenses of the Company in connection with the request as the Board thinks fit and a sum equal to the costs incurred by the Company of any such indemnity or security as is referred to in that Article. 20. The Company shall not be bound to register more than four persons as the holders of any share. LIEN 21. The Company shall have a first and paramount lien on every share (not being a fully paid share) for all moneys, whether presently payable or not, called or payable at a fixed time in respect of such share but the Board may at any time waive any lien which has arisen and may declare any share to be wholly or in part exempt from the provisions of this Article. The Company's lien on a share shall extend to all dividends payable thereon. 22. The Company may sell, in such manner as the Board may think fit, any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of fourteen days after a notice in writing stating and demanding payment of the sum presently payable and giving notice of the intention to sell in default shall have been given to the holder for the time being of the share or to the person entitled by reason of his death or bankruptcy to the share. 23. The net proceeds of sale, after payment of the costs thereof, shall be received by the Company and applied in or towards payment or satisfaction of the sum in respect whereof the lien exists so far as the same is presently payable, and any residue shall (subject to a like lien for sums not presently payable as existed upon the shares prior to the sale) be paid to the person entitled to the shares at the time of the sale. For giving effect to any such sale the Board may authorise some person to transfer the shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the shares and he shall not be bound to see to the application of the purchase money, nor shall his title to 7 8 the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale. TRANSFER OF SHARES 24. All transfers of shares shall be effected by instrument in writing in any usual or common form or in any other form which the Board may approve. 25. The instrument of transfer of a share shall be signed by or on behalf of the transferor, and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register in respect thereof: Provided that in the case of a partly paid share (including a share in respect of which the whole of any premium payable under the terms of its allotment has not become payable and been paid) the instrument of transfer must also be signed by or on behalf of the transferee. 26. The Board may, in its absolute discretion and without assigning any reason therefor, decline to register any transfer of shares (other than fully paid shares) provided that the refusal does not prevent dealings in the shares in the Company from taking place on an open and proper basis. 27. The Board may also decline to recognise any instrument of transfer unless:- (a) the instrument of transfer is lodged with the Company accompanied by a certificate of the shares to which it relates, and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed some other person on his behalf, the authority of that person so to do); and (b) the instrument of transfer is in respect of only one class of share. 28. If the Board refuses to register a transfer it shall, within two months after the date of which the transfer was lodged, send to the transferee notice of the refusal and (except in the case of fraud) return to him the instrument of transfer. All instruments of transfer which are registered may be retained by the Company. 29. No fee shall be charged on the registration of any transfer, probate, letters of administration, certificate of death or marriage, power of attorney, stop notice or other instrument relating to or affecting the title to any share or otherwise for making any entry in the Register affecting title to any shares. 30. The transfer books and the Register of Members and any Register of holders of debentures of the Company may, upon giving such notice as is required by the Statutes (if any), be closed at such time or times and for such period as the Board shall deem expedient (and either generally or in respect of any class of shares) provided that the same be not closed for any greater period in the whole than thirty days in any year. 31. The Company shall be entitled to destroy:- (a) any instrument of transfer which has been registered, at any time after the expiration of six years from the date of registration thereof; 8 9 (b) any dividend mandate or any variation or cancellation thereof or any notification of change of name or address, at any time after the expiration of two years from the date of recording thereof; (c) any share certificate which has been cancelled, at any time after the expiration of one year from the date of such cancellation; and it shall conclusively be presumed in favour of the Company that every entry in the Register purporting to have been made on the basis of an instrument of transfer or other document so destroyed was duly and properly made, that every instrument of transfer so destroyed was a valid and effective instrument duly and properly registered, that every share certificate so destroyed was a valid certificate duly and properly cancelled and that every other document destroyed hereunder was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the Company, Provided always that:- (a) the provisions aforesaid shall apply only to the destruction of a document in good faith and without express notice to the Company that the preservation of such document was relevant to any claim (regardless of the parties thereto); (b) nothing contained in this Article shall be construed as imposing upon the Company any liability in respect of the destruction of any such document earlier than as aforesaid or in any case where the conditions of proviso (a) above are not fulfilled; and (c) references in this Article to the destruction of any document include references to its disposal in any manner. 32. Nothing herein contained shall preclude the Board from recognising a renunciation of the allotment of any share by the allottee in favour of some other person. TRANSMISSION OF SHARES 33. In the case of the death of a Member the survivor or survivors, where the deceased was a joint holder, and the executors or administrators of the deceased, where he was a sole holder or only surviving holder, shall be the only persons recognised by the Company as having any title to his shares, but nothing herein contained shall release the estate of a deceased Member from any liability in respect of any share jointly held by him with other persons. 34. Any person becoming entitled to a share in consequence of the death or bankruptcy of a Member may upon such evidence being produced as may from time to time be required by the Board and subject as hereinafter provided may elect either to be registered himself as holder of the share or to have some person nominated by him registered as the transferee thereof. 35. If any person so becoming entitled shall elect to be registered himself he shall deliver or send to the Company a notice in writing signed by him, stating that he so elects. If he 9 10 shall elect to have another person registered he shall testify his election by executing a transfer of such share to that person. All the limitations, restrictions and provisions of these presents relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or bankruptcy of the Member had not occurred and the notice or transfer were a transfer executed by such Member. 36. A person becoming entitled to a share in consequence of the death or bankruptcy of a Member shall, upon supplying to the Company such evidence as the Board may reasonably require to show his title to the share, be entitled to receive and may give a discharge for any dividends or other moneys payable in respect of the share, but he shall not be entitled in respect of the share to receive notices of or to attend or vote at general meetings of the Company or, save as aforesaid, to exercise in respect of the share any of the rights or privileges of a Member until he shall have become registered as the holder thereof provided always that the Board may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within sixty days, the Board may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the share until the requirements of the notice have been complied with. CALLS ON SHARES 37. The Board may from time to time make calls upon the Members in respect of any moneys unpaid on their shares (whether on account of the nominal amount of the shares or by way of premium) and not by the conditions of allotment thereof made payable at fixed times [provided that no call shall be payable at less than one month from the date fixed for payment of the last previous call] and each Member shall (subject to the Company giving to him at least fourteen days' notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified the amount called on his shares. A call may be revoked or postponed in whole or part as the Board may determine. 38. A call may be made payable by instalments and shall be deemed to have been made at the time when the resolution of the Board authorising the call was passed. 39. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. 40. If a sum called in respect of a share is not paid before or on the day appointed for payment thereof the person from whom the sum is due shall pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate, not exceeding the Prescribed Rate, as the Board may determine, and all expenses that may have been incurred by the Company by reason of such non-payment, but the Board shall be at liberty to waive payment of such interest and expenses wholly or in part. 41. Any sum which, by the terms of issue of a share, becomes payable on allotment or at any fixed date, whether on account of the nominal amount of the share or by way of premium, shall for all the purposes of these presents be deemed to be a call duly made and payable on the date on which, by the terms of issue, the same becomes payable, and in the case of non-payment all the relevant provisions of these presents as to payment of 10 11 interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified. 42. The Board may make arrangements on the issue of shares for a difference between the holders in the amount of calls to be paid and in the times of payment. 43. The Board may, if it thinks fit, receive from any Member willing to advance the same all or any part of the moneys (whether on account of the nominal value or premium) uncalled and unpaid upon any shares held by him, but any Member making any such advance shall not be entitled to receive interest thereon and, save as provided by the terms of issue of shares, for the purposes of Articles 24, 25, 26, 77, 78 and 140 no account shall be taken of any amount paid up on a share in advance of a call or the date upon which sum premium or other payment is payable. FORFEITURE OF SHARES 44. If a Member fails to pay any call or instalment of a call on or before the day appointed for payment thereof, the Board may at any time thereafter during such time as any part of such call or instalment remains unpaid serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued and expenses incurred by the Company by reason of such non-payment. 45. The notice shall name a further day (not being less than fourteen days from the date of the notice) or on before which and the place where the payment required by the notice is to be made and shall state that in the event of non-payment at or before the time and at the place appointed the shares in respect of which such call or instalment is payable will be liable to be forfeited. The Board may accept the surrender of any share liable to be forfeited hereunder and, in such case, references herein to forfeiture shall include surrender. 46. If the requirements of any such notice as aforesaid be not complied with, any share in respect of which such notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture. Forfeiture shall be deemed to occur at the time of the passing of the said Resolution of the Board. 47. When any share has been forfeited, notice of the forfeiture shall forthwith be given to the holder of the share or the person entitled to the share by reason of the death or bankruptcy of the holder (as the case may be), and an entry of the forfeiture, with the date thereof, shall forthwith be made in the Register, but no forfeiture shall be in any manner invalidated by any omission or neglect to make such entry or give such notice as aforesaid. 48. A forfeited share shall be deemed to be the property of the Company and may be sold, re-allotted or otherwise disposed of either to the person who was, before forfeiture, the holder thereof or entitled thereto or to any other person and either subject to or discharged from calls made or instalments due prior to the forfeiture upon such terms and in such manner as the Board shall think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the Board may think fit provided that the 11 12 Company shall not exercise any voting rights in respect of such share and any such share not disposed of in accordance with the foregoing within a period of three years from the date of its forfeiture shall thereupon be cancelled in accordance with the provisions of the Statutes. For the purpose of giving effect to any such sale or other disposition the Board may authorise some person to transfer the share so sold or otherwise disposed of to the purchaser thereof or other person becoming entitled thereto. 49. A Member whose shares have been forfeited shall cease to be a Member in respect of the forfeited shares but shall, notwithstanding, remain liable to pay to the Company all moneys which at the date of forfeiture were presently payable to him to the Company in respect of the shares with interest thereon at such rate as the Board may determine, not exceeding the Prescribed Rate, from the date of forfeiture until payment. The Board may, if it thinks fit, waive the payment of the such interest or any part thereof. 50. A statutory declaration in writing that the declarant is a Director or the Secretary of the Company and that a share has been duly forfeited on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. The Company may receive the consideration (if any) given for the share on the sale or disposition thereof and may execute a transfer of the share in favour of the person to whom the same is sold or disposed of, and he shall thereupon be registered as the holder of the share and shall not be bound to see the application of the purchase money (if any) nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share. STOCK 51. The Company may from time to time by ordinary resolution convert any paid up shares into stock of the same class and may re-convert any stock into paid up shares of the same class and of any denomination. 52. The holders of stock may transfer the same or any part thereof in the same manner and subject to the same regulations as and subject to which the shares from which the stock arose might previously to conversion have been transferred or as near thereto as circumstances admit. The Board may from time to time fix the minimum amount of stock transferable and restrict or forbid the transfer of fractions of such minimum, but the minimum shall not exceed the nominal amount of the share from which the stock arose. 53. The holders of stock shall, according to the amount of the stock held by them, have the same rights, privileges and advantages as regards dividends, voting at general meetings of the Company and other matters as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and in assets on a winding up) shall be conferred by an amount of stock which would not, if existing in shares, have conferred such privilege or advantage. 54. All such of the provisions of these presents as are applicable to paid up shares shall apply to stock, and the words "share" and "shareholder" herein shall include "stock" and "stockholder". 12 13 INCREASE OF CAPITAL 55. The Company may from time to time by ordinary resolution increase its capital by such sum to be divided into shares of such amounts as the resolution shall prescribe. 56. The new shares shall be subject to all the provisions of these presents with reference to the payment of calls, lien, transfer, transmission, forfeiture and otherwise. ALTERATIONS OF CAPITAL 57. The Company may from time to time by ordinary resolution:- (a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares. (b) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association provided that:- (i) in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of a share from which the reduced share is derived; and (ii) the resolution whereby any share is sub-divided may determine that as between the holders of the shares resulting from such sub-division one or more of the shares may have any such preferred or other special rights over, or may have such qualified or deferred rights or be subject to any such restrictions as compared with, the other or others as the Company has power to attach to unissued or new shares. (c) cancel any shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled. 58. The Company may also by special resolution reduce its share capital and any capital redemption reserve or any share premium account in any manner and with and subject to any incident authorised and consent required by law. 59. Subject to any direction by the Company in general meeting, whenever as the result of any exercise of any options or warrants to subscribe for Ordinary Shares in the Company or as the result of any consolidation or sub-division and consolidation of shares or any issue of shares in connection with the capitalisation of profits Members of the Company are entitled to any issued shares of the Company in fractions, the Board may deal with each of such fractions as they shall determine and in particular may sell the shares to which Members are so entitled in fractions for the best price reasonably obtainable and pay and distribute to and amongst the Members entitled to such shares in due proportion the net proceeds of the sale thereof. For the purpose of giving effect to any such sale the Board may nominate some person to execute a transfer of the shares sold on behalf of the Members so entitled to the purchaser thereof and may cause the name of the purchaser to be entered in the Register as the holder of the shares comprised in any such transfer and the purchaser shall not be bound to see to the application of the purchase money nor shall 13 14 his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale. GENERAL MEETING 60. The Company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year, and not more than fifteen months shall elapse between the date of one annual general meeting of the Company and that of the next. The annual general meeting shall be held at such time and place as the Board shall appoint. 61. All general meetings other than annual general meetings shall be called extraordinary general meetings. 62. The Board may, whenever it thinks fit, convene an extraordinary general meeting, and extraordinary general meetings shall also be convened on such requisition (and for a date not later than eight weeks after receipt of the requisition), or, in default, may be convened by such requisitionists, as provided by the Statutes. If at any time there are not within the United Kingdom sufficient Directors capable of acting to form a quorum, any Director or any two Members of the Company may convene an extraordinary general meeting in the same manner as nearly as possible as that in which meetings may be convened by the Board. NOTICE OF GENERAL MEETINGS 63. An annual general meeting and a meeting called for the passing of a special resolution shall be called by twenty-one days' notice in writing at the least, and a meeting other than an annual general meeting or a meeting for the passing of a special resolution shall be called by fourteen days' notice in writing at the least. The notice shall be exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and shall specify the place, the day and the hour of meeting, and, in the case of a special business, the general nature of that business. The notice convening an annual general meeting shall specify the meeting as such, and the notice convening a meeting to pass a special or extraordinary resolution shall specify the intention to propose the resolution as a special or extraordinary resolution as the case may be. Notice of every general meeting shall be given in manner hereinafter mentioned to such persons as are, in accordance with the provisions of these presents, entitled to receive such notices from the Company, and also to the Auditors for the time being of the Company. Provided that a meeting of the Company shall, notwithstanding that it is called by shorter notice than that specified in this Article, be deemed to have been duly called if it is so agreed:- (a) in the case of a meeting called as the annual general meeting by all the Members entitled to attend and vote thereat; and (b) in the case of any other meeting, by a majority in number of the Members having a right to attend and vote at the meeting, being a majority together holding not less than 95 per cent in nominal value of the shares giving that right. 14 15 In every Notice calling a meeting there shall appear with reasonable prominence a statement that a Member entitled to attend and vote is entitled to appoint one or more proxies to attend and vote instead of him and that a proxy need not also be a Member. 64. The accidental omission to give notice of a meeting or (in cases where instruments of proxy are sent out with the Notice) the accidental omission to send such instrument of proxy to, or the non-receipt of notice of a meeting or such instrument of proxy by, any person entitled to receive notice shall not invalidate the proceedings at that meeting. PROCEEDINGS AT GENERAL MEETINGS 65. All business shall be deemed special that is transacted at an extraordinary general meeting and also all business that is transacted at an annual general meeting with the exception of the declaration and sanctioning of dividends, the consideration of the accounts and balance sheet and the reports of the Directors and Auditors and any other documents required by law to be attached or annexed to the balance sheets, the election of Directors and other officers in place of those retiring by rotation or otherwise, the appointment of (when special notice of the resolution for such appointment is not required by the Statutes) the Auditors, the fixing of the remuneration of the Auditors and the voting of additional remuneration to the Directors. 66. No business shall be transacted at any general meeting unless a quorum be present when the meeting proceeds to business. Save as otherwise provided by these presents, three Members present in person or by proxy and entitled to vote shall be a quorum for all purposes. A corporation being a Member shall be deemed for the purpose of this Article to be personally present if represented by proxy or in accordance with the provisions of the Statutes. 67. If within half-an-hour from the time appointed for the meeting a quorum is not present the meeting, if convened on the requisition of Members, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week at the same time and place, or to such other day and at such other time or place as the Chairman of the Meeting may determine, and the provisions of Article 67 shall apply. If at such adjourned meeting a quorum as above defined is not present within fifteen minutes from the time appointed for holding the meeting the Members present whether in person or by proxy shall be quorum and shall have power to decide upon all matters which could properly have been disposed of at the meeting from which the adjournment took place. 68. The Chairman (if any) of the Board or, in his absence, any deputy-Chairman shall preside as Chairman at every general meeting of the Company. 69. If there be no such Chairman or deputy-Chairman, or if at any meeting neither the Chairman nor the deputy-Chairman be present within fifteen minutes after the time appointed for holding the meeting, or if neither of them be willing to act as Chairman, the Directors present shall choose one of their number to act, or if one Director only be present he shall preside as Chairman if willing to act. If no Director be present, or if all the Directors present decline to take the chair, the Members present shall choose one of their number to be Chairman. 15 16 70. The Chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took pace. When a meeting is adjourned for thirty days or more not less than seven clear days notice in writing of the adjourned meeting shall be given specifying the day, the place and the time of the meeting but it shall not be necessary to specify in such notice the nature of the business to be transacted at the adjourned meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. 71. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands) a poll is demanded by the Chairman or by at least three Members present in person or by proxy and entitled to vote or by any Member or Members present in person or by proxy and representing in the aggregate not less than one-tenth of the total voting rights of all Members having the right to vote at the meeting or holding shares conferring a right to vote at the meeting on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all shares conferring that right. Unless a poll is so demanded, a declaration by the Chairman that a resolution has, on a show of hands, been carried or carried unanimously or by a particular majority or not carried by a particular majority or lost, and an entry to that effect in the book of proceedings of the Company shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such a resolution. 72. If any votes are counted which ought not to have been counted or might have been rejected the error shall not vitiate the resolution unless it is pointed out at the same meeting and not in that case unless it shall, in the opinion of the Chairman of the meeting, be of sufficient magnitude to vitiate the resolution. 73. If a poll is duly demanded the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. 74. In the case of an equality of votes at a general meeting, whether on a show of hands or on a poll, the Chairman of such meeting shall be entitled to a second or casting vote. 75. A poll demanded on the election of a Chairman, or on a question of adjournment, shall be taken forthwith. A poll demanded on any other question shall be taken at such time (not being more than thirty days after the date of the meeting or adjourned meeting at which the poll is demanded) and place and in such manner as the Chairman directs. No notice need to given of a poll not taken immediately. 76. The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll has been demanded, and the demand may be withdrawn at any time before the poll is taken, whether before or after the termination of the meeting in question. If a poll is demanded on a declaration of the result of a show of hands and the demand is later withdrawn in accordance with the provisions of this Article, then the resolution in question shall be carried or lost (as the case may be) in accordance with such declaration and an entry to that effect shall be made in the book of proceedings of the Company. 16 17 VOTES OF MEMBERS 77. Subject to any special terms as to voting upon which any shares may be issued or may be for the time being be held, on a show of hands every Member who is present in person shall have one vote, and on a poll every Member who is present in person or by proxy shall have one vote for every four Ordinary Shares of which he is holder. Provided that on a poll every Member who is present in person or by proxy shall in respect of Ordinary shares held by him otherwise than fully paid up have one vote for every (pound)1 in the aggregate paid up in respect of the nominal amount of Ordinary Shares held by him. 78. (A) No member shall, unless the Board otherwise determines, be entitled in respect of any share in the capital of the Company held by him to be present or to vote at any General Meeting or meeting of the holders of any class of shares in the capital of the Company either personally or by proxy, or be reckoned in the quorum for any such meeting or to exercise any other right conferred by membership in relation to meetings of the Company or holders of any class of shares in the capital of the Company if any call or other sum presently payable by him to the Company in respect of such share remains unpaid. (B) If any Member, or any person appearing to the Board to be interested in shares held by such Member, has been duly served with a notice under Section 212 of the Companies Act 1985 and is in default for the prescribed period in supplying to the Company the information thereby required then the Board may in their absolute discretion at any time thereafter serve a notice (a direction notice") upon such Member as follows:- (1) a direction notice may direct that, in respect of the shares in relation to which the default occurred ("default shares"), the Member shall not be entitled to be present or to vote at a General Meeting or a meeting of the holders of any class of shares of the Company either personally or by proxy or to be reckoned in the quorum for any such meeting or to exercise any other right conferred by membership in relation to the meetings of the Company or of the holders of any class of shares of the Company; and (2) where the default shares represent at least 0.25 per cent. of the class of shares concerned, then the direction notice may additionally direct that:- (a) in respect of the default shares any dividend or other money which would otherwise be payable on such shares shall be retained by the Company without any liability to pay interest thereon when such money is finally paid to the Member; and/or (b) no transfer other than an approved transfer of any shares held by such Members shall be registered unless: (i) the Member is not himself in default as regards supplying the information requested; and 17 18 (ii) the transfer is of part only of the Member's holding and when presented for registration is accompanied by a certificate by the Member in a form satisfactory to the Board to the effect that after due and careful enquiry the Member is satisfied that no person in default as regards supplying such information is interested in any of the shares the subject of the transfer. The Company shall send to each other person appearing to be interested in the shares the subject of any direction notice a copy of the notice, but the failure or omission by the Company to do so shall not invalidate such notice. (C) Any direction notice shall cease to have effect not more than seven days after the earlier of the receipt by the Company of: (a) a notice of an approved transfer, but only in relation to the shares transferred; or (b) all the information required by the section 212 notice, in a form satisfactory to the Board. (D) For the purpose of this Article:- (1) a person shall be treated as appearing to be interested in any shares if the Member holding such shares has given to the Company a notification under the said Section 212 which either (a) names such person as being so interested or (b) fails to establish the identities of those interested in the shares and (after taking into account the said notification and any relevant Section 212 notification) the Company knows or has reasonable cause to believe that the person in question is or may be interested in the shares; (2) the prescribed period in respect of any particular Member is twenty-eight days from the date of service of the said notice under Section 212 except where the default shares represent at least 0.25 per cent of the class of shares concerned in which case such period shall be reduced to fourteen days; (3) a transfer of shares is an approved transfer if but only if:- (a) it is a transfer of shares to an offeror by way or in pursuance of acceptance of a takeover offer for a company (as defined in Section 14 of the Company Securities (Insider Dealing) Act 1985); or (b) the Directors are satisfied that the transfer is made pursuant to a sale of the whole of the beneficial ownership of the shares to a party unconnected with a Member and with other persons appearing to be interested in such shares; or (c) the transfer results from a sale made through a recognised investment exchange (as defined in the Financial Services Act 1986) or any stock exchange outside the United Kingdom on which the Company's shares are normally traded. 18 19 (E) Nothing contained in this Article shall limit the power of the Board under Section 216 of the Companies Act 1985. 79. In the case of joint holders of a share the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register. 80. A corporation being a member may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members of the Company and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Member of the Company. 81. A Member in respect of whom an order has been made by any Court having jurisdiction (in the United Kingdom or elsewhere) in matters concerning mental disorder may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis or other person appointed by such Court, and such committee, receiver, curator bonis or other person may vote on a poll by proxy. 82. No objection shall be raised to the qualifications of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairman of the meeting whose decision shall be final and conclusive. 83. On a poll votes may be given either personally or by proxy and a Member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way. 84. The instrument appointing a proxy shall be in writing in any usual common form, or any other form which the Board may approve, under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor be a corporation, either under seal or under the hand of an officer or attorney duly authorised. The signature of such instrument need not be witnessed. 85. A proxy need not be a Member of the Company. A Member may appoint more than one proxy to attend on the same occasion. Deposit of an instrument of proxy shall not preclude a Member from attending and voting in person at the meeting or any adjournment thereof. 86. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, or a copy certified in accordance with the provisions of the Powers of Attorney Act, 1971, shall be deposited at the Office (or such other place in the United Kingdom as may be specified in the Notice convening the meeting) not less than forty-eight hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote, or in the case of a poll taken subsequently to the date of a meeting or adjourned meeting, not less than twenty-four hours before the time 19 20 appointed for the taking of the poll and in default the instrument of the proxy shall not be treated as valid. 87. An Instrument appointing a proxy shall, unless the contrary is stated thereon, be valid as well for any adjournment of the meeting to which it relates. No Instrument appointing a proxy shall be valid after the expiration of twelve months from the date named in it as the date of its execution except at an adjourned meeting or on a poll demanded at a meeting or adjourned meeting in cases where the meeting was originally held within twelve months from that date. 88. A vote given (or poll demanded) in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the instrument of proxy or of the authority under which it was executed, or the transfer of the share in respect of which the instrument of proxy is given, provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the Company at the Office before or such other place (if any) as is specified for depositing the instrument of proxy before the commencement of the meeting or adjourned meeting, or the taking of the poll at which the instrument of proxy is used. 89. Subject to the provisions of the Statutes, a resolution in writing signed by all the Members for the time being entitled to receive notice of and to attend and vote at General Meetings (or being corporations by their duly authorised representatives) shall be as valid and effective as if the same had been passed at a General Meeting of the Company duly convened and held, and may consist of two or more documents in like form each signed by one or more of the Members. DIRECTORS 90. Unless and until otherwise determined by the Company in general meeting, the Directors shall be not less than two. 91. Each Director shall have power to appoint either another Director or any person approved for that purpose by a resolution of the Board to act as alternate Director in his place during his absence. A person so appointed shall (subject to his giving to the Company an address within the United Kingdom at which notices may be served on him) be entitled to receive notices of all meetings of the Board and, in the absence from the Board of the Director appointing him, to attend and vote at meetings of the Board, and to exercise all the powers, rights, duties and authorities of the Director appointing him. A Director may at any time revoke the appointment of an alternate appointed by him, and subject to such approval as aforesaid where requisite appoint another person in his place. The appointment of an alternate Director shall cease and determine on the happening of any event which if he was a Director would render him legally disqualified from acting as a Director or if he has a receiving order made against him or if he compounds with his creditors generally or if he becomes of unsound mind. An alternate Director need not hold a share qualification and shall not be counted in reckoning the maximum number of directors allowed by these presents. Any Director acting as alternate shall have an additional vote for each Director for whom he acts as alternate but shall count as only one for the purpose of determining whether a quorum be present. An alternate Director shall ipso facto cease to be an alternate Director if his appointor ceases for any reason to be a Director, provided that if any Director retires by rotation or otherwise but is re-elected at 20 21 the same meeting, any appointment made by him pursuant to this Article which was in force immediately before his retirement shall remain in force as though he had not retired. 92. All appointments and removals of an alternate Director shall be effected by instrument in writing delivered at the Office and signed by the appointor. 93. Every person acting as an alternate Director shall be an officer of the Company, and shall also be responsible to the Company for his own acts and defaults, and he shall not be deemed to be the agent of or for the Director appointing him. The remuneration of any such alternate Director shall be payable out of the remuneration payable to the Director appointing him, and shall consist of such portion of the last-mentioned remuneration as shall be agreed between the alternate and the Director appointing him. 94. The Directors shall be paid out of the funds of the Company by way of fees for their services as Directors such sums (if any) as the Board may from time to time determine (not exceeding in the aggregate an annual sum of(pound)500,000 or such larger amount as the Company may by Ordinary Resolution determine) and such remuneration shall be divided among the Directors as the Board may by resolution determine or, failing such determination, equally, except that in such event any Director holding office for less than a year shall only rank in such division in proportion to the period during which he has held office during such year. Such remuneration shall be deemed to accrue from day to day. The Directors (including alternate Directors) shall also be entitled to be paid their reasonable travelling, hotel and incidental expenses of attending and returning from meetings of the Board or committees of the Board or general meetings or otherwise incurred while engaged on the business of the Company. Payment may be made to any one or more Directors under this Article 94 by the allotment and issue to any such Director of shares in the capital of the Company on such terms and subject to such conditions as the Board may determine provided that the aggregate market value of the shares which may be so allotted and issued, taken, in relation to the shares the subject of any particular commitment, as at the date on which the commitment (whether conditional or unconditional) to do so was entered into, shall not exceed the aggregate annual sum which may be paid in fees to Directors for the year in respect of which that commitment is made. 95. Any Director who is appointed to any executive office or who serves on any committee or who devotes special attention to the business of the Company, or who otherwise performs services which in the opinion of the Board are outside the scope of the ordinary duties of a Director, may be paid such extra remuneration by way of salary, percentage of profits or otherwise as the Board may determine. 96. A Director of the Company may be or become a director or other officer or other offices, servant or member of or otherwise interested in any company promoted by the Company or in which the Company may be interested as shareholder or otherwise, and no such Director shall be accountable to the Company for any remuneration or other benefits received by him as a director or other officer servant or member of or from his interest in such other company. The Board may also exercise or procure the exercise of the voting power conferred by the shares in any other company held or owned by the Company (and the Directors may exercise any voting rights to which they are entitled as directors of such other Company) in such manner in all respects as they think fit, 21 22 including the exercise thereof in favour of any resolution appointing the members of the Board or any of them to be directors or officers or servants of such other company, and fixing their remuneration as such, and each Member of the Board may vote as a Director of the Company in connection with any of the matters aforesaid. 97. Subject to the provisions of the Statutes a Director may hold any other office or place of profit under the Company (except that of Auditor) in conjunction with this office of Director and may act by himself or through his firm in a professional capacity for the Company, and in any such case on such terms as to remuneration and otherwise as the Board may arrange. Any such remuneration shall be in addition to any remuneration provided for by any other article. No Director shall be disqualified by his office from entering into any Contract, arrangement, transaction or proposal with the Company, either with regard to his tenure of any such other office or place of profit or as vendor, purchaser or in any other manner whatever. Subject to the Statutes, no such contract, arrangement transaction or proposal entered into by or on behalf of the Company in which any Director or person connected with him is in any way interested, whether directly or indirectly, shall be liable to be avoided, nor shall any Director who enters into any such contract, arrangement transaction or proposal or who is so interested be liable to account to the Company for any profit realised by any such contract or arrangement, transaction or proposal by reason of such Director holding that office or of the fiduciary relation thereby established. 98. A Director who is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company shall declare the nature of his interest at the meeting of the Board at which the question of entering into the contract or arrangement is first taken into consideration, if his interest then exists, or in any other case at the first meeting of the Board after he becomes so interested. A general notice to the Board given by a Director to the effect that he is a member of a specified company or firm and is to be regarded as interested in all transactions with such company or firm shall be sufficient declaration of interest under this Article, and after such general notice it shall not be necessary to give any special notice relating to any subsequent transaction with such company or firm, provided that either the notice is given at a meeting of the Board or the Director giving the same takes reasonable steps to secure that it is brought up and read at the next Board meeting after it is given. 99. (a) Save as herein provided, a Director shall not vote in respect of any contract or arrangement or any other proposal whatsoever in which he has any material interest otherwise than by virtue of his interests in shares or debentures or other securities of or otherwise in or through the Company. A Director shall not be counted in the quorum at a meeting in relation to any resolution on which he is debarred from voting. (b) A Director shall (in the absence of some other material interest than is indicated below) be entitled to vote (and be counted in the quorum) in respect of any resolution concerning any of the following matters, namely:- (i) the giving of any security or indemnity to him in respect of money lent or obligations incurred by him at the request of or for the benefit of the Company or any of its subsidiaries. 22 23 (ii) the giving of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security. (iii) any proposal concerning an offer of shares of debentures or other securities of or by the Company or any of its subsidiaries for subscription or purchase in which offer he is to be interested as a participant in the underwriting or sub-underwriting thereof. (iv) any proposal concerning any other company in which he is interested, directly or indirectly and whether as an officer or shareholder or otherwise howsoever, provided he is not the holder of or beneficially interested in 1 per cent or more of the issued shares of any class of such company or any third company through which his interest is derived. (v) any proposals concerning the adoption, modification or operation of a superannuation fund or retirement benefits scheme under which he may benefit and which has been approved by or is subject to and conditional upon approval by the Board of Inland Revenue for taxation purposes. (vi) any proposal concerning the adoption, modification or operation of any scheme for enabling employees including full time Executive Directors of the Company and/or any subsidiary to acquire shares of the Company or any arrangement for the benefit of employees of the Company or any of its subsidiaries under which the Director benefits in a similar manner to employees and which does not accord to any Director as such any privilege or advantage not generally accorded to the employees to whom the scheme or arrangement relates. (vii) the purchase and/or maintenance of any insurance as permitted by Article 164 below. (c) A Director shall not vote or be counted in the quorum on any resolution concerning his own appointment as the holder of any office or place of profit with the Company or any company in which the Company is interested including fixing or varying the terms of his appointment or the termination thereof. (d) Where proposals are under consideration concerning the appointment (including fixing or varying the terms of appointment) of two or more Directors to offices or employments with the Company or any company in which the Company is interested, such proposals may be divided and considered in relation to each Director separately and in such case each of the Directors concerned (if not debarred from voting under paragraph (b) (iv) of this Article) shall be entitled to vote (and be counted in the quorum) in respect of each resolution except that concerning his own appointment. (e) If any question shall arise at any meeting as to the materiality of a Director's interest or as to the entitlement of any Director to vote and such question is not resolved by his voluntarily agreeing to abstain from voting, such question shall be referred to the 23 24 Chairman of the meeting and his ruling in relation to any other Director shall be final and conclusive except in a case where the nature or extent of the interests of the Director concerned have not been fairly disclosed. 100. The Company may by Ordinary Resolution suspend or relax the provisions of Articles 97, 98 and 99 to any extent or ratify any transaction not duly authorised by reason of a contravention of such Articles. 101. Director shall not be required to hold any shares of the Company as a qualification for office, but nevertheless shall be entitled to attend and speak (but not to vote) at any general meeting of, or at any separate meeting of the holders of any class of shares in, the Company. 102. Without prejudice to the provisions for retirement by rotation or otherwise hereinafter contained, the office of Director shall be vacated in any of the events following, namely:- (a) if he resigns his office by writing under his hand left at the Office. (b) if in England or elsewhere an Order is made by any court claiming jurisdiction in that behalf on the ground (however formulated) of mental disorder for his detention or for the appointment of a guardian or a receiver or other person to exercise powers with respect to his property or affairs. (c) if, without leave, he be absent otherwise than on the business of the Company, from meetings of the Board for six consecutive months, and the Board resolve that his office be vacated. (d) if he becomes prohibited by law from being a director of the Company. (e) if he ceases to be a Director by virtue of Section 293 of the Companies Act 1985. POWERS AND DUTIES OF DIRECTORS 103. The business of the Company shall be managed by the Board, which may exercise all such powers of the Company as are not by the Act or by these presents required to be exercised by the Company in general meeting, subject nevertheless to the provisions of these presents and of the Act and to such regulations, being not inconsistent with such provisions, as may be prescribed by the Company in general meeting, but no regulations made by the Company in general meeting shall invalidate any prior act of the Board which would have been valid if such regulations had not been made. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the Board by any other Article. 104. The Board may establish any local boards or agencies for managing any of the affairs of the Company, either in the United Kingdom or elsewhere, and may appoint any persons to be members of such local boards, or any managers or agents, and may fix their remuneration, and may delegate to any local board, manager or agent any of the powers, authorities and discretions vested in the Board, with power to sub-delegate, and may authorise the members of any local board or any of them to fill any vacancies therein and 24 25 to act notwithstanding vacancies, and any such appointment or delegation may be made upon such terms and subject to such conditions as the Board may think fit, and the Board may remove any person so appointed, and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby. 105. The Board may by power of attorney appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Board, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board under these presents) and for such period and subject to such conditions as it may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit, and may also authorise any such attorney to sub-delegate all or any of the powers authorities and discretions vested in him. 106. The Company may exercise the powers conferred by the Statutes with regard to having an Official Seal for use abroad and with regard to having an official seal for sealing and evidencing securities, and such powers shall be vested in the Board. 107. The Company may exercise the powers conferred by the Statutes with regard to the keeping of an Overseas Branch Register, and the Board may (subject to the provisions of the Statutes) make and vary such regulations as it may think fit respecting the keeping of any such register. 108. All cheques, promissory notes, drafts, bills of exchange and other negotiable and transferable instruments and all receipts for moneys paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as the Board shall from time to time determine. 109. The Board shall cause minutes to be made in books provided for the purpose:- (a) of all appointments of officers made by the Board; (b) of the names of the Directors present at each Board or Committee meeting; (c) of all resolutions and proceedings at all meetings of the Company and of the Board and of the Committees, and any such minute as aforesaid, if purporting to be signed by the Chairman of the meeting at which the proceedings took place, or by the Chairman of the next succeeding meeting, shall be receivable as prima facie evidence of the matters stated in such minutes without any further proof. It shall not be necessary for members of the Board present at any meeting of the Board to sign their names in the minute book or other book kept for recording attendance. BORROWING POWERS 110. (A) The Board may exercise all the powers of the Company to borrow or raise money as they think necessary for the purposes of the Company. The aggregate 25 26 amount at any time owing by the Company and/or its non-banking subsidiary undertakings (as hereinafter defined) in respect of moneys borrowed by it or them or any of them (inclusive of moneys borrowed by the Company or a non-banking subsidiary undertaking from a banking subsidiary undertaking but exclusive of moneys borrowed by the Company from a non-banking subsidiary undertaking and exclusive of moneys borrowed by a non-banking subsidiary undertaking from another non-banking subsidiary undertaking or from the Company) shall not at any time, without the previous sanction of the Company in general meeting, exceed whichever shall be the greater of(pound)150 million and a sum equal to three times the aggregate of:- (i) the nominal capital of the Company for the time being issued and paid up; (ii) the share premium of the Company; (iii) other amounts standing to the credit of the consolidated capital and reserves (including but not limited to the capital redemption reserve, the revaluation reserve, other reserves and the profit and loss account); (iv) minority interests all as shown in a consolidation of the then latest audited Balance Sheets of the Company and each of its non-banking subsidiary undertakings but after:- (a) making such adjustments as may be appropriate in respect of any variation in the issued and paid-up share capital the Share Premium Account and the Capital Redemption Reserve of the Company since the date of its latest audited Balance Sheet; (b) deducting therefrom (i) an amount equal to any distribution by the Company or its non-banking subsidiary undertakings out of profits earned prior to the date of the latest audited consolidated Balance Sheet and which has been declared, recommended or made since that date except so far as provided for in such Balance Sheet or to the extent that a distribution from a non banking subsidiary undertaking is received by the Company or another non banking subsidiary undertaking; (ii) all intangible assets other than goodwill; (iii) any debit balance on any consolidated reserve to the extent that such amount has not already been deducted from the reserves of the Company and its non banking subsidiary undertakings; (c) adding thereto the total aggregate amount of any sums which have been charged to reserves in the said consolidation of the then latest audited Balance Sheets of the Company and each of its non-banking subsidiary undertakings in respect of goodwill arising (whether on consolidation or otherwise) as a result of the acquisition of any asset by the Company or its non-banking subsidiary undertakings (a "relevant asset") after deducting therefrom a sum equal to the aggregate of the amounts of any permanent diminution in value of any of the relevant assets; 26 27 (d) making such other adjustments as the Auditors for the time being of the Company consider appropriate. (B) A Report by the Auditors for the time being of the Company as to the aggregate amount which may at any one time in accordance with the provisions of paragraph (A) of this Article be owing by the Company and its non-banking subsidiary undertakings, without such sanction as aforesaid shall be conclusive in favour of the Company and all persons dealing with the Company. (C) (i) No such sanction shall be required to the borrowing of any sum of money intended to be applied and applied within six months after such borrowing in the repayment (with or without premium) of any moneys then already borrowed and outstanding notwithstanding that the same may result in such limit being exceeded; and (ii) in calculating the amount of "moneys borrowed" for the purpose of this Article there shall be deducted the amount of the cash and short-term deposits and cash equivalents of the Company and its non-banking subsidiary undertakings (other than any borrowed moneys permitted by Article 110(C)(i) above and any cash, short-term deposits and cash equivalents held or made in the capacity of a trustee of, or for or on behalf of, any other person or persons). For the purpose of this Article "cash equivalents" means short term, highly liquid investments that are readily convertible into known amounts of cash and which are purchased as part of cash management activities to earn interest or similar income rather than to make investment gains. (D) No lender or other person dealing with the Company shall be concerned to see or enquire whether the said limit is observed and no debt incurred or security given in excess of such limit shall be invalid or ineffectual except in the case of express notice to the lender or the recipient of the security at the time the debt was incurred or the security that the limit hereby imposed had been or was thereby exceeded. (E) The Board shall take all necessary steps (including the exercise of all voting and other rights or powers of control exercisable by the Company in relation to its subsidiary undertakings) for securing that the aggregate amount at any one time outstanding in respect of moneys borrowed by all or any of the non-banking subsidiary undertakings of the Company, exclusive as aforesaid, shall never (without such sanction as aforesaid) when added to the amount (if any) for the time being owing in respect of moneys borrowed by the Company, exclusive as aforesaid, exceed the said limit. (F) In this Article, the expressions following shall have the meanings hereinafter mentioned, that is to say:- "subsidiary undertaking" means a company which is for the time being a subsidiary undertaking of the Company as that expression is defined by Statutes. "non-banking subsidiary undertaking" means a subsidiary undertaking of the Company which is not a banking subsidiary undertaking as hereinafter defined. 27 28 "banking subsidiary undertaking" means any subsidiary undertaking which is a bank authorised under the Banking Act or other subsidiary undertaking the major part of the business of which for the time being consists of the lending of money and/or the taking of deposits and/or the holding of the equity share capital of any such subsidiary undertaking and/or the co-ordination of the activities of such subsidiary undertaking. (G) The Board may borrow or raise any such money as aforesaid upon or by the issue or sale of any bonds, debentures or securities, and upon such terms as to the time of repayment, rate of interest, price of issue or sale, payment of premium or bonus upon redemption or repayment or otherwise as they may think proper including a right for the holder of bonds, debentures or securities to exchange the same for shares in the Company of any class authorised to be issued. (H) Subject as aforesaid the Board may secure or provide for the payment of any moneys to be borrowed authorised by a mortgage of or charge upon all or any part of the undertaking or property of the Company, both present and future, and upon any capital remaining unpaid upon the shares of the Company whether called up or not, or by any other security, and the Board may confer upon any mortgagee or person in whom any debenture or security is vested such rights and powers as they think necessary or expedient, and they may vest any property of the Company in trustees for the purpose of securing any moneys so borrowed or raised, and confer upon the trustees or any receiver to be appointed by them or by any debenture-holder such rights and powers as the Board may think necessary or expedient in relation to the undertaking or property of the Company, or the management of the realisation thereof or the making, receiving or enforcing of calls upon the members in respect of unpaid capital , and otherwise, and may make and issue debentures to trustees for the purpose of further security, and any such trustees may be remunerated. (I) The Board may give security for the payment of any moneys payable by the Company in like manner as for the payment of money borrowed or raised, but in such case the amount shall for the purposes of the above limitation be reckoned as moneys borrowed. PROCEEDINGS OF BOARD 111. (A) The Board may meet together for the despatch of business adjourn and otherwise regulate its meetings as it thinks fit. Questions arising at any meeting shall be determined by a majority of votes. In case of an equality of votes the Chairman shall have a second or casting vote. A Director may and the Secretary on the requisition of a Director shall at any time summon a Board meeting. It shall not be necessary to give notice of a Board meeting to any Director for the time being absent from the United Kingdom. (B) Any Director or member of a committee of the Board may participate in a meeting of the Directors or such committee by means of conference telephone or similar communications equipment whereby all persons participating in the meeting can 28 29 hear each other and any Director or member of a committee participating in a meeting in this manner shall be deemed to be present in person at such meeting. 112. The quorum necessary for the transaction of the business of the Board may be fixed by the Board and unless so fixed at any other number shall be two. 113. Notice of a Board Meeting shall be deemed to be duly given to a Director whether it is given to him personally or by word of mouth or sent in writing to him at his last known address or any other address given by him to the Company for this purpose. A Director absent or intending to be absent or intending to be absent from the United Kingdom may request the Board that notices of Board Meetings shall, during his absence, be sent in writing to him at his last known address or any other address given by him to the Company for this purpose, whether or not out of the United Kingdom. 114. The continuing Directors may act notwithstanding any vacancy in their body, but if and so long as their number be reduced below the minimum number fixed by or in accordance with these presents the continuing Directors may not for the purpose of filling up vacancies in their body or of summoning general meetings of the Company but not for any other purpose, and may act for either of the purposes aforesaid whether or not their number be reduced below the number fixed by or in accordance with these presents as the quorum. 115. The Board may elect a Chairman and deputy-Chairman of its meetings and determine the period for which they are respectively to hold office. If no such Chairman or deputy-Chairman be elected, or if at any meeting neither the Chairman nor the deputy-Chairman be present within five minutes after the time appointed for holding the same, Directors present may choose one of their number to be Chairman of the meeting. 116. A meeting of the Board at which a quorum is present shall be competent to exercise all powers and discretions for the time being exercisable by the Board. 117. The Board may delegate any of its powers to committees, whether consisting of a member or members of its body or not, as it thinks fit. Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on it by the Board. 118. The meetings and proceedings of any committee consisting of two or more members shall be governed by the provisions herein contained for regulating the meetings and proceedings of the Board so far as the same are applicable and are not superseded by any regulations imposed by the Board under the last preceding Article. 119. A resolution in writing signed by all the Directors entitled to receive notice of a meeting of the Board or by all the members of a committee for the time being shall be as valid and effectual as a resolution passed at a meeting of the Board or, as the case may be, of such committee duly called and constituted. Such resolution may be contained in one document or in several documents in like form each signed by one or more of the Directors or members of the committee concerned PROVIDED THAT such a resolution need not be signed by an alternate Director if it is signed by the Director who appointed him. 29 30 120. All acts done by any Board or committee or by any person acting as a Director, notwithstanding it be afterwards discovered that there was some defect in the appointment or continuance in office of any such Director or person acting as aforesaid or that any of them was disqualified from holding office or not entitled to vote, or that they or any of them had vacated office, shall be as valid as if every such person had been duly appointed, was qualified, had continued to be a Director and was entitled to vote. ROTATION OF BOARD 121. At every annual general meeting one-third of the Directors for the time being or if their number is not three or a multiple of three then the number nearest to but not exceeding one-third shall retire from office provided that no Director shall be required to retire pursuant to the provision of this Article more frequently than every third year. A Director retiring at a meeting shall retain office until the close or adjournment of the meeting. 122. The Directors to retire on each occasion shall be those who have been longest in office since their last election, but as between persons who became or were last re-elected Directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot. The length of time a Director has been in office shall be computed from his last election or appointment when he has previously vacated office. 123. A Director retiring by rotation shall, subject to the Statutes, be eligible for re-election. 124. Subject to Article 126 the Company at the meeting at which a Director retires in manner aforesaid may fill up the vacated office by electing a person thereto unless at such meeting it is expressly resolved not to fill up such vacated office. The Company may also in general meeting (subject to the provisions of Article 126) elect any person to be a Director either to fill a casual vacancy or as an addition to the existing Board but so that the total number of Directors shall not at any time exceed the maximum number fixed by or in accordance with these presents. 125. A single resolution for the appointment of two or more persons as Directors shall not be put at any General Meeting, unless a resolution that it shall be so put has first been agreed to by the meeting without any vote being given against it. 126. No person, other than a Director retiring at the meeting, shall, unless recommended by the Board, be eligible for election to the office of a Director at any general meeting unless, not less than seven and not more than twenty-one clear days before the day appointed for the meeting, there shall have been given to the Secretary notice in writing by some Member duly qualified to be present and vote at the meeting for which such notice is given of his intention to propose such person for election and also notice in writing signed by the person to be proposed of his willingness to be elected. 127. If at any meeting at which an election of Directors ought to take place the place of any retiring Director is not filled up such Director, if offering himself for re-election, shall be deemed to have been re-elected unless at such meeting it be expressly resolved not to fill up such place unless a motion that he be re-elected is put to the meeting and defeated. 30 31 128. The Company in general meeting may from time to time increase or reduce the number of Directors and may also determine in what rotation such increased or reduced number is to go out of office. 129. Without prejudice to the power of the Company in general meeting in pursuance of any of the provisions of these presents to appoint any person to be a Director, the Board shall have power at any time and from time to time to appoint any person (subject to the Statutes) to be a Director, either to fill a casual vacancy or as an addition to the existing Board, but so that the total number of Directors shall not at any time exceed the maximum number fixed by or in accordance with these presents. Any Director so appointed shall hold office only until the dissolution of the next following annual general meeting unless he is re-elected during that meeting and he shall not be taken into account in determining the Directors who are to retire by rotation at such meeting. 130. The Company may by ordinary resolution of which special notice has been given in accordance with the Statutes, remove any Director before the expiration of his period of office notwithstanding anything in these presents or in any agreement between the Company and such Director. Such removal shall be without prejudice to any claims such director may have for damages for breach of any contract of service between him and the Company. The Company may (subject to Article 126 or to the provisions of the Statutes as the case may be) by an ordinary resolution appoint another person in his stead. The person so appointed shall be subject to retirement at the same time as if he had become a Director on the day on which the Director in whose place he is appointed was last elected a Director but this provision shall not prevent him from being eligible for re-election. MANAGING AND EXECUTIVE DIRECTORS 131. Subject to the Statutes the Board may from time to time appoint one or more of its body to the office of Executive Chairman, Managing Director or Assistant Managing Director or to such other executive office for such period and upon such terms as it thinks fit and subject to the provisions of any agreement entered into in any particular case, may revoke such appointment. The appointment of a director so appointed shall (without prejudice to any claim he may have for damages for breach of any contract of service between him and the Company) ipso facto determine if he ceases from any cause to be a Director. 132. A Managing Director, Assistant Managing Director or other Director holding executive office shall receive such remuneration (whether by way of salary, commission or participation in profits, or otherwise) as the Board may determine, and either in addition to or in lieu of his remuneration as a Director. 133. The Board may entrust to and confer upon an Executive Chairman, Managing Director, Assistant Managing Director or other Director holding executive office any of the powers exercisable by it upon such terms and conditions and with such restrictions as it thinks fit, and either collaterally with or to the exclusion of its own powers, and may from time to time (subject to the terms of any agreement entered into in any particular case) revoke, withdraw, alter or vary all or any of such powers. 31 32 SECRETARY 134. Subject to the Statutes, the Secretary shall be appointed by the Board for such term, at such remuneration and upon such conditions as it may think fit; and any Secretary so appointed may be removed by the Board. No person shall be appointed or hold office as Secretary who is:- (a) the sole Director of the Company; or (b) a corporation the sole director of which is the sole Director of the Company; or (c) the sole director of a corporation which is the sole Director of the Company. The Board may from time to time if there is no Secretary or no Secretary capable of acting by resolution appoint any person to be an assistant or deputy Secretary to exercise the functions of the Secretary. 135. A provision of the Act or these presents requiring or authorising a thing to be done by or to a Director and the Secretary shall be satisfied by its being done by or to the same person acting both as Director and as, or in the place of, the Secretary. PENSIONS AND ALLOWANCES 136. The Board may exercise all the powers of the Company to give or award pensions, annuities, gratuities and superannuation or other allowances or benefits to any persons who are or have at any time been Directors of or employed by or in the service of the Company or its predecessors in business or of any company which is a subsidiary or subsidiary undertaking of or related to or associated with the Company or any such subsidiary or subsidiary undertaking and to the wives, widows, children and to the relatives and dependants of any such persons and to any person who is otherwise connected or related thereto and may establish, maintain, support, subscribe to and contribute to all kinds of Schemes, Trusts and Funds (whether contributory or non-contributory) for the benefit of such persons as are hereinbefore referred to or any of them or any class of them, and so that any Director shall be entitled to receive and retain for his own benefit any such pension, annuity, gratuity, allowance or other benefit (whether under any such fund or scheme or otherwise). THE SEAL 137. Neither the Seal nor any official Seal kept under Section 40 of the Companies Act 1985 shall be affixed to any instrument except in the presence or by the authority of at least two Directors or at least one Director and the Secretary and such Directors or Director and Secretary shall sign every instrument to which either is so affixed in their presence or by their authority except that all forms of certificate for shares stock or debentures or representing any other form of security may be issued and sealed by the Registrars of the Company if there shall be in force a Resolution of the Board to this effect and all forms of certificates shall bear the autographic signatures of one or more Directors and the Secretary unless there shall be for the time being in force a Resolution of the Board that the same need not be signed or countersigned by any person (in which event no signature or counter signature shall be required) and such signatures may if the Board so resolves be affixed by mechanical means. 32 33 138. The Board may obtain such number of devices for affixing the seal or any official seal kept pursuant to Section 40 of the Companies Act 1985 to any instrument as they shall think necessary or expedient and may in particular deliver such a device to any Registrars of the Company whether in the United Kingdom or abroad, provided that the Board shall provide for the safe custody of the Seal and any official seal kept pursuant to section 40 of the Companies Act 1985 and shall take such steps as may appear necessary to prevent any unauthorised use of any such device. DIVIDENDS 139. The Company in general meeting may from time to time declare dividends to be paid to the Members according to their rights and interests in the profits, but no dividend shall be declared in excess of the amount recommended by the Board. 140. Subject to the rights of persons, if any, entitled to shares with any priority, preference or special rights as to dividend, all dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is paid, but no amount paid up on a share in advance of calls shall be treated for the purposes of this Article as paid up on the share. All dividends shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid; but if a share be issued on terms providing that it shall rank for dividend as from a particular date such share shall rank for dividend accordingly. 141. The Board may from time to time pay to the Members such interim dividends as appear to the Board to be justified by the profits of the Company; the Board may also pay the fixed dividend payable on any shares of the Company half-yearly or otherwise on fixed dates, whenever such profits, in the opinion of the Board, justify that course. 142. The Board may deduct from any dividend payable to any Member all sums of money (if any) presently payable by him to the Company on account of calls or otherwise. 143. No dividend or other moneys payable on or in respect of a share shall bear interest against the Company. No dividend or interim dividend shall be paid otherwise than in accordance with the provisions of the Statutes which apply to the Company. 144. All dividends interest and other sums unclaimed for one year after having been declared may be invested or otherwise made use of by the Directors for the benefit of the Company until claimed. All dividends unclaimed for a period of twelve years after having been declared shall be forfeited and shall revert to the Company. The payment of any unclaimed dividend, interest or other moneys payable by the Company on or in respect of any share into a separate account shall not constitute the Company a trustee thereof. 145. Every dividend shall be paid (subject to the Company's lien) to those Members who shall be on the Register at the date fixed by the Directors for the purpose of determining the persons entitled to such dividend (whether the date of payment or some other date) notwithstanding any subsequent transfer or transmission of shares. 146. Any dividend, interest or other sum payable in cash to the holder of shares may be paid by direct debit, bank transfer, cheque, warrant or money order and may remit the 33 34 same by post addressed to the holder at his registered address or, in the case or joint holders, addressed to the holder whose name stands first on the Register in respect of the shares, or to such person and such address as the holder or joint holders may in writing direct, and the Company shall not be responsible for any loss of any such cheque, warrant or order. Every such cheque, order or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the registered holder or, in the case of joint holders, to the order of the holder whose name stands first on the Register in respect of such shares, the payment of such cheque, warrant or order shall be a good discharge to the Company. Any one or two or more joint holders may give effectual receipts for any dividends or other moneys payable in respect of the shares held by such joint holders. If on two consecutive occasions cheques, warrants or orders in payment of dividends or moneys payable in respect of any share have been sent through the post in accordance with the provisions of this Article but have been returned, undelivered or left uncashed during the periods which the same are valid the Company need not thereafter dispatch further cheques or warrants in payment of dividends or other moneys payable in respect of the share in question until the Member or other person entitled thereto shall have communicated with the Company or has supplied in writing to the Office an address for the purpose. 147. Any general meeting declaring a dividend may, upon the recommendation of the Board, direct payment or satisfaction of such dividend wholly or in part by the distribution of specific assets, and in particular of paid-up shares or debentures of any other company, and the Board shall give effect to such direction, and where any difficulty arises in regard to such distribution the Board may settle it as it thinks expedient, and in particular may issue fractional certificates and fix the value for distribution of any such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to secure equality of distribution and may vest any such specific assets in trustees upon trust for the persons entitled to the dividend as may seem expedient to the Board. 148. The Board may before recommending any dividend set aside out of the profits of the Company such sums as it thinks proper as a reserve or reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company may be properly applied and pending such application may, at the like discretion either be employed in the business of the Company or be invested in such investments as the Board may from time to time think fit. The Board may divide the reserve into such special funds as they think fit, and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have divided as they think fit. The Board may also without placing the same to reserve carry forward any profits which it may think prudent not to divide. CAPITALISATION OF PROFITS 149. Subject to the provisions of Article 150, the Board may capitalise any part of the amount for the time being standing to the credit of any of the Company's reserve accounts (including any share premium account and capital redemption reserve) or to the credit of the profit and loss account (in each case, whether or not such amounts are available for distribution), and appropriate the sum resolved to be capitalised either:- 34 35 (i) to the holders of Shares on the Register at the close of business on such date as may be specified in the resolution of the General Meeting granting authority for such capitalisation who would have been entitled thereto if distributed by way of dividend and in the same proportions; or (ii) to such number of the holders of Shares who may, in relation to any dividend or dividends, validly accept (whether before or after the date of adoption or alteration of this Article) an offer or offers on such terms and conditions as the Board may determine (and subject to such exclusions or other arrangements as the Board may consider necessary or expedient to deal with legal or practical problems in respect of overseas shareholders or in respect of shares held by a depositary or its nominee) to receive new Shares, credited as fully paid, in lieu of the whole or any part of any such dividend or dividends (any such offer being called a "Scrip Dividend Offer") and the Board shall apply such sum on their behalf either in or towards paying up any amounts, if any, for the time being unpaid on any shares held by such holders respectively or in paying up in full at par unissued shares or debentures of the Company to be allotted credited as fully paid up to such holders (where paragraph (i) applies, in the proportion aforesaid), or partly in the one way and partly in the other. 150. (A) The authority of the Company in General Meeting shall be required for the Board to implement any Scrip Dividend Offer (which authority may extend to one or more offers) and may be given at any time, whether before or after the making or any acceptance of the Scrip Dividend Offer). (B) The authority of the Company in General Meeting shall be required for any capitalisation pursuant to paragraph (i) of Article 149 above. (C) A share premium account and a capital redemption reserve and any other amounts which are not available for distribution (and, in the case of a Scrip Dividend Offer, any other reserve and the profit and loss account) may, for the purposes of Article 149, only be applied in the paying up of unissued shares to be allotted to holders of Shares of the Company credited as fully paid (and, in the case of any Scrip Dividend Offer, such shares shall be allotted in accordance with the terms of such Offer). 151. Whenever a capitalisation requires to be effected, the Board may do all acts and things which they may consider necessary or expedient to give effect thereto, with full power to the Board to make such provision as they think fit for the case of shares or debentures becoming distributable in fractions (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the Members concerned) and also to authorise any person to enter on behalf of all Members concerned into an agreement with the Company providing for any such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned. ACCOUNTS 152. The Board shall cause accounting records to be kept in accordance with the Statutes. 35 36 153. The accounting records shall be kept at the Office or, subject to the Statutes, at such other place or places as the Board may think fit and shall always be open to the inspection of the Directors and other officers of the Company. No Members (other than a Director or other officer) shall have any right of inspecting any account or book or document of the Company except as conferred by law or authorised by the Board. 154. The Board shall from time to time, in accordance with the Statutes, cause to be prepared and to be laid before the Company in general meeting such profit and loss accounts, balance sheets, group accounts (if any) and reports as are referred to in the Statutes. 155. A printed copy of every balance sheet and profit and loss account (including every document required by law to be annexed thereto) which is to be laid before the Company in general meeting and of the Directors' and Auditors' reports shall (in accordance with and subject as provided by the Statutes) not less than twenty-one days before the date of the meeting be sent to every Member (whether or not he is entitled to receive notices of General Meetings of the Company) and to every holder of debentures of the Company (whether or not he is so entitled) and to every other person who is entitled to receive notices of General Meetings of the Company under those presents or the Statutes and the number of copies of each of these documents for the time being required under the regulations and practice of The London Stock Exchange and shall at the same time be forwarded to the Secretary of the Quotations Department, The London Stock Exchange, provided that this Article shall not require a copy of these documents to be sent to any person of whose address the Company is not aware or to more than one of the joint holders of any shares or debentures and provided further that a summary financial statement may be sent to Members instead of such balance sheet, profit and loss account, annexures and reports insofar as is permitted under the Statutes. AUDIT 156. Auditors shall be appointed and their duties regulated in accordance with the Statutes. NOTICES 157. Any notice or other document may be served by the Company on any Member either personally or by sending it through the post in a prepaid letter addressed to such member at his registered address as appearing in the Register or at any other address in the United Kingdom which the Member shall have given in writing to the Company as his address for service. In the case of joint holders of a share, all notices shall be given to that one of the joint holders whose name stands first in the Register, and notice so given shall be sufficient notice to all the joint holders. 158. Any Member described in the Register by an address not within the United Kingdom who shall, from time to time, give to the Company an address within the United Kingdom at which notices may be served upon him shall be entitled to have notices served upon him at such address, but save as aforesaid no Member other than a Member described in the Register by an address within the United Kingdom shall be entitled to receive any notice from the Company. 36 37 159. If at any time by reason of the suspension or any curtailment of postal services in the United Kingdom the Company is unable effectively to convene a General Meeting by notices sent through the post, a General Meeting may be convened by a notice advertised on the same date in at least two daily newspapers with appropriate circulation and such notice shall be deemed to have been duly served on all members entitled thereto at noon on the day when the advertisement appears. In any such case the Company shall send confirmatory copies of the notice by post if at least seven days prior to the date of the Meeting the posting of notices to addresses throughout the United Kingdom again becomes practicable. 160. Where a notice (or other document) is sent by post, service of the notice (or other document) shall be deemed to be effected by properly addressing, prepaying, and posting a letter containing the notice (or other document), and to have been effected at the latest within twenty-four hours if prepaid as first-class and within seventy-two hours if prepaid as second-class after the letter containing the same is posted; and in proving such service it shall be sufficient to prove that the letter containing the same was properly addressed and stamped and put into a post office. 161. A notice (or other document) may be given by the Company to the persons entitled to a share in consequence of the death or bankruptcy of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title of representatives of the deceased or trustee of the bankrupt, or by any like description, at the address, if any, within the United Kingdom supplied for the purpose by the persons claiming to be so entitled, or (until such an address has been so supplied) by giving the notice (or other document) in any manner in which the same might have been given if the death or bankruptcy had not occurred. 162. Subject to such restrictions affecting the right to receive notice as are for the time being applicable to the holders of any class of shares, notice of every General Meeting shall be given in any manner hereinbefore authorised to:- (a) ever Member except those Members who (having no registered address within the United Kingdom) have not supplied to the Company an address within the United Kingdom for the giving of notices to them; (b) the Auditor for the time being of the Company; (c) the Directors and (if any) alternative Directors. No other person shall be entitled to receive notices of General Meetings. WINDING-UP 163. If the Company shall be wound up the Liquidator may, with the sanction of an extraordinary resolution of the contributories, divide among the contributories in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and for such purpose may set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the contributories or different classes of contributories and 37 38 may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories as the Liquidator, with the like sanction shall think fit. INDEMNITY 164. Subject to the provisions of the Statutes but without prejudice to any indemnity to which the person concerned may otherwise be entitled, every Director, Managing Director, Manager, Officer and Auditor of the Company shall be indemnified out of the assets of the Company against all costs, charges, expenses, losses or liabilities incurred by him in or about the execution of the duties of his office or otherwise in relation thereto, including a liability incurred by him or the Auditor in defending any proceedings, whether civil or criminal, in which judgement is given in his favour, or in which he is acquitted, or in connection with any application in which relief is granted to him by the Court and the Company may purchase and maintain for any such Director, Managing Director, Manager, Officer or Auditor insurance against any such costs, charges, expenses, losses or liabilities including any liability which by virtue of any rule of law would otherwise attach to him or the Auditor in respect of any negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the Company. 165. (A) The Company shall be entitled to sell at the best price reasonably obtainable any share or stock of a Member or any share or stock to which a person is entitled by transmission if and provided that:- (i) for a period of twelve years no cheque or warrant sent by the Company through the post in a prepaid letter addressed to the member or to the person entitled by transmission to the share or stock at his address on the Register or other the last known address given by the Member or the person entitled by transmission to which cheques and warrants are to be sent has been cashed and no communication has been received by the Company from the Member or the person entitled by transmission provided that in such period of twelve years at least three dividends whether interim or final on or in respect of the share or stock in question have become payable and no such dividend during that period has been claimed; and (ii) the Company has at the expiration of the said period of twelve years by advertisement in both a leading London daily newspaper and in a newspaper circulating in the area in which the address referred to in paragraph (i) of this Article is located given notice of its intention to sell such share or stock; and (iii) the Company has not during the further period of three months after the date of the advertisement and prior to the exercise of the power of sale received any communication from the member or person entitled by transmission; and (iv) the Company has first given notice in writing to the Quotations Department of The London Stock Exchange of its intention to sell such shares or stock. (B) To give effect to any such sale the Company may appoint any person to execute as transferor an instrument of transfer of the said share, or stock and such instrument of transfer shall be as effective as if it had been executed by the registered holder of 38 39 or person entitled by transmission to such share or stock and the title of the transferee shall not be affected by any irregularity or invalidity in the proceedings relating thereto. The net proceeds of sale shall belong to the Company which shall be obliged to account to the former member or other person previously entitled as aforesaid for an amount equal to such proceeds and shall enter the name of such former member or other person in the books of the Company as a creditor for such amount. No trust shall be created in respect of the debt, no interest shall be payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments (other than shares of the Company or its holding company if any) as the Board may from time to time think fit. 39 EX-2.2 3 h86436ex2-2.txt FORM OF CERTIFICATE OF AMERICAN DEPOSITORY SHARES 1 EXHIBIT 2.2 NO. ------------------------------------ AMERICAN DEPOSITARY SHARES (EACH AMERICAN DEPOSITARY SHARE REPRESENTS TWO (2) DEPOSITED SHARES) [FORM OF FACE OF RECEIPT] AMERICAN DEPOSITARY RECEIPT EVIDENCING AMERICAN DEPOSITARY SHARES REPRESENTING ORDINARY SHARES OF AMVESCAP PLC (INCORPORATED UNDER THE LAWS OF ENGLAND AND WALES) THE RIGHTS OF HOLDERS OF RECEIPTS TO DIRECT THE VOTING OF, TO RECEIVE DIVIDENDS ON, AND TO TRANSFER SHARES MAY BE RESTRICTED AS DESCRIBED IN PARAGRAPH 7 BELOW. THE BANK OF NEW YORK, as Depositary (hereinafter called the "Depositary"), hereby certifies that __________________ is the owner of ________ American Depositary Shares, representing deposited Ordinary Shares, par value 25p each, including rights to receive such Ordinary Shares ("Shares"), of AMVESCAP PLC, a corporation organized under the laws of England and Wales (the "Company"). At the date hereof, each American Depositary Share represents two (2) Shares deposited under the Deposit Agreement (hereinafter defined) at the London office of The Bank of New York as Custodian (the "Custodian"). Capitalized terms used herein that are not defined herein shall have the meanings assigned to them in the Deposit Agreement. 2 (1) THE DEPOSIT AGREEMENT. This American Depositary Receipt is one of the receipts (the "Receipts") executed and delivered pursuant to the amended and restated Deposit Agreement dated as of November 2, 1998, as further amended and restated as of November 8, 2000 (as amended from time to time, the "Deposit Agreement") by and among the Company, the Depositary and all registered holders ("Holders") from time to time of Receipts, each of whom by accepting a Receipt becomes a party thereto, bound by all applicable terms and provisions thereof and hereof. The Deposit Agreement sets forth the rights of Holders and the rights and duties of the Depositary in respect of the Shares deposited thereunder and any and all other securities, property and cash from time to time received in respect of such Shares and held thereunder (such Shares, securities, property and cash, collectively, the "Deposited Securities"). Copies of the Deposit Agreement and of the Company's provisions of or governing Deposited Securities are on file at the Depositary's Office, the office of the Custodian and at any other designated transfer office. The statements made on the face and the reverse of this Receipt are summaries of certain provisions of the Deposit Agreement and are qualified by and subject to the detailed provisions thereof. The Depositary makes no representation or warranty as to the validity or worth of the Deposited Securities. (2) WITHDRAWAL OF DEPOSITED SECURITIES. Upon surrender of this Receipt and payment of the fee of the Depositary provided for in paragraph (8) of this Receipt at the Depositary's Office or at such other offices as it may designate, subject to the Deposit Agreement and the provisions of or governing the Deposited Securities, the Holder hereof is entitled to the delivery without unreasonable delay at the office of the Custodian to such Holder or upon such Holder's order of the Deposited Securities at the time represented by the American Depositary Shares evidenced by this Receipt. At the request, risk and expense of the Holder hereof, the Depositary may deliver such Deposited Securities at the Depositary's Office or at such other place as may have been requested by the Holder. Delivery of Deposited Securities may be made by the delivery of certificates to the extent such Deposited Securities may be represented by certificates. Neither the Depositary nor the Custodian shall deliver Deposited Securities to any person except pursuant to this paragraph (2) or paragraphs (12), (15), (17), (19), (20) or (21). Notwithstanding any other provision of the Deposit Agreement or this Receipt, the Depositary may restrict the withdrawal of Deposited Securities only for the reasons set forth in General Instruction I.A.(1) to Form F-6 under the Securities Act of 1933. (3) TRANSFERS, SPLIT-UPS AND COMBINATIONS. Subject to paragraph (4), this Receipt is transferable on the register maintained by the Depositary by the Holder hereof in person or by duly authorized attorney, upon -2- 3 surrender of this Receipt at any designated transfer office properly endorsed or accompanied by proper instruments of transfer and duly stamped as may be required by applicable law; provided that the Depositary may close the Receipt register at any time or from time to time when deemed expedient by it in connection with the performance of its duties under the Deposit Agreement or at the request of the Company. This Receipt may be split into other Receipts or may be combined with other Receipts into one Receipt, evidencing the same aggregate number of American Depositary Shares as those evidenced by the Receipt or Receipts surrendered. (4) CERTAIN LIMITATIONS. Prior to the execution and delivery, registration, registration of transfer, split-up or combination of any Receipt, the delivery of any distribution in respect thereof, or, subject to the last sentence of paragraph (2), the withdrawal of any Deposited Securities, the Depositary, the Company or the Custodian may require: (a) payment of (i) any stock transfer or other tax or other governmental charge with respect thereto, (ii) any stock transfer or registration fees in effect for the registration of transfers of Shares or other Deposited Securities upon any applicable register and (iii) any applicable charges as provided in paragraph (8) of this Receipt; (b) the production of proof satisfactory to it of the identity and genuineness of any signature and of such other information (including without limitation information as to citizenship, residence, exchange control approval, or legal or beneficial ownership of any securities) as it may deem necessary or proper or as the Company may require; and (c) compliance with such regulations, if any, as the Depositary may establish consistent with the Deposit Agreement. The delivery of Receipts against deposits of Shares may be suspended, deposits of Shares may be refused, or the registration of transfer of Receipts, their split-up or combination or, subject to the last sentence of paragraph (2), the withdrawal of Deposited Securities may be suspended, generally or in particular instances, when the Receipt register or any register for Shares or other Deposited Securities is closed or when any such action is deemed necessary or advisable by the Depositary or the Company. Notwithstanding Section 2.03 of the Deposit Agreement, the Depositary may execute and deliver Receipts prior to the receipt of Shares pursuant to Section 2.02 of the Deposit Agreement (a "Pre-Release"). The Depositary may, pursuant to Section 2.05 of the Deposit Agreement, deliver Shares upon the receipt and cancellation of Receipts which have been Pre-Released, whether or not such cancellation is prior to the termination of such Pre-Release or the Depositary knows that such Receipt has been Pre-Released. The Depositary may receive Receipts in lieu of Shares in satisfaction of a Pre-Release. Each Pre-Release will be (a) preceded or accompanied by a written representation from the person to whom Receipts or Shares are to be delivered that such person, or its customer, owns the Shares or Receipts to be remitted, as the case may be, (b) at all times fully collateralized with cash or such other collateral as the Depositary deems appropriate, (c) terminable by, the Depositary on not more than five (5) business days notice, and (d) subject to such further indemnities and credit regulations as the Depositary deems appropriate. The number of American Depositary Shares which are outstanding at any -3- 4 time as a result of Pre-Releases will not normally exceed thirty percent (30%) of the Shares deposited under the Deposit Agreement; provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate. The Depositary may retain for its own account any compensation received by it in connection with the foregoing. The Depositary will not knowingly accept for deposit under the Deposit Agreement any Shares required to be registered under the Securities Act of 1933 and not so registered; the Depositary may refuse to accept for such deposit any Shares identified by the Company in order to facilitate the Company's compliance with securities laws in the United States. (5) LIABILITY OF HOLDER FOR TAXES. If any tax or other governmental charge shall become payable by or on behalf of the Custodian or the Depositary with respect to this Receipt or any Deposited Securities represented by the American Depositary Shares evidenced by this Receipt, such tax or other governmental charge shall be payable by the Holder hereof, who shall pay the amount thereof to the Depositary. The Depositary may refuse to effect any registration of transfer of this Receipt or any split-up or combination hereof or any withdrawal of such Deposited Securities until such payment is made, and may withhold or deduct from any distributions on such Deposited Securities, or may sell for the account of the Holder hereof any part or all of such Deposited Securities (after attempting by reasonable means to notify the Holder hereof prior to such sale), and may apply such cash or the proceeds of any such sale in payment of such tax or other governmental charge, the Holder hereof remaining liable for any deficiency. (6) WARRANTIES BY DEPOSITOR. Every person depositing Shares under the Deposit Agreement shall be deemed thereby to represent and warrant that such Shares and each certificate thereof are validly issued and outstanding, fully paid, nonassessable and free of pre-emptive rights, that the person making such deposit is duly authorized so to do and that no registration under the Securities Act of 1933 is required in connection with the public offer and sale of such Shares or of the American Depositary Shares representing such Shares. Such representations and warranties shall survive the deposit of Shares and issuance of Receipts. (7) DISCLOSURE OF INTERESTS. Notwithstanding any other provisions of the Deposit Agreement, and without prejudice to the disclosure obligations in respect of Shares contained in the Companies Act of 1985 of Great Britain, as amended or supplemented from time to time, or any successor thereto (the "Companies Act") , each Holder hereof (a) agrees to comply with requests from the Company, which are made under statutory provisions in the United Kingdom to provide information as to the capacity in which such Holder owns this Receipt and regarding the identity of any other person interested in the Receipt and the -4- 5 nature of such interest and (b) may, pursuant to such statutory provisions and any provisions of the Articles of Association of the Company, forfeit the right to direct the voting of, the right to receive dividends on, and be prohibited from transferring, Shares as to which compliance is not made, all as if this Receipt were to the extent practicable the Shares represented thereby. In addition, and without prejudice to the disclosure obligations in respect of Shares contained in the Companies Act, any Holder of this Receipt who is or becomes directly or indirectly interested (within the meaning of the Companies Act) in the issued share capital of the Company equal to or in excess of the "notifiable percentage" (at the date hereof, three percent) referred to in the Companies Act, or is aware that another person for whom it holds such Receipt is so interested, shall within two days after becoming so interested or so aware, and thereafter upon certain changes in such interest, notify the Company as required by the Companies Act 1985. (8) CHARGES OF DEPOSITARY. The following charges shall be incurred by any party depositing or withdrawing Shares or by any party surrendering Receipts or to whom Receipts are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the Receipts or Deposited Securities or a distribution of Receipts pursuant to Section 4.03 of the Deposit Agreement), whichever applicable: (1) stock transfer or other taxes and other governmental charges, (2) cable, telex, facsimile transmission and delivery charges incurred at the request of any such party, (3) transfer or registration fees for the registration of transfers of deposited Shares and other Deposited Securities on any applicable register in the name of the Depositary or its nominee or the Custodian or its nominee in connection with the deposit of Shares or in the name of such person as a Holder may direct in connection with the withdrawal of Deposited Securities (that are payable by persons depositing Shares or Holders withdrawing Deposited Securities; there are no such fees payable by such persons or Holders in respect of the Shares as of the date hereof), (4) expenses of the Depositary in connection with the conversion of foreign currency into U.S. dollars and (5) a fee of $5.00 or less per 100 American Depositary Shares (or portion thereof) for the execution and delivery of Receipts pursuant to Section 2.03, 4.03 or 4.04 of the Deposit Agreement and the surrender of Receipts pursuant to Section 2.05 or 6.02 of the Deposit Agreement. The Depositary, subject to Article 8 hereof, may own and deal in any class of securities of the Company and its affiliates and in Receipts. (9) TITLE TO RECEIPTS. Title to this Receipt (and to the Deposited Securities represented by the American Depositary Shares evidenced hereby), when properly endorsed or accompanied by proper instruments of transfer, is transferable by delivery with the same effect as in the case of a negotiable instrument; that the Depositary, notwithstanding any notice to the contrary, -5- 6 may treat the person in whose name this Receipt is registered on the register maintained by the Depositary as the absolute owner hereof for the purpose of determining the person entitled to any distribution or notice and for all other purposes. (10) VALIDITY OF RECEIPT. This Receipt shall not be entitled to any benefits under the Deposit Agreement or be valid or obligatory for any purpose unless executed by the Depositary by the manual or facsimile signature of a duly authorized officer of the Depositary. (11) AVAILABLE INFORMATION. The Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934 and accordingly files certain reports with the Commission. Such reports and other information may be inspected and copied at public reference facilities maintained by the Commission located at the date of the Deposit Agreement at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Dated: Countersigned: THE BANK OF NEW YORK, as Depositary, By: /s/ KENNETH A. LOPIAN --------------------- Kenneth A. Lopian Senior Vice President The address of the Depositary's Office is 101 Barclay Street, New York, New York 10286, and its principal executive office is located at One Wall Street, New York, New York 10286. -6- 7 [FORM OF REVERSE OF RECEIPT] SUMMARY OF CERTAIN ADDITIONAL PROVISIONS OF THE DEPOSIT AGREEMENT (12) DISTRIBUTIONS UPON DEPOSITED SECURITIES. Whenever the Depositary or the Custodian shall receive any cash dividend or other cash distribution upon any Deposited Securities, the Depositary shall, subject to the Deposit Agreement, distribute the amount thus received, by checks drawn on a bank in the United States, to the Holders on the record date set by the Depositary therefor of Receipts evidencing American Depositary Shares representing such Deposited Securities, in proportion to the number of American Depositary Shares representing such Deposited Securities held by each of them respectively; provided that the Depositary shall make appropriate adjustments in the amounts so distributed in respect of (a) any of Deposited Securities being not entitled, by reason of its date of issuance or otherwise, to receive all or any portion of such distribution or (b) any amounts (i) required to be withheld by the Company, the Custodian or the Depositary on account of taxes or (ii) charged by the Depositary in connection with the conversion of foreign currency into U.S. Dollars. Cash distributions and cash proceeds from sales of non-cash distributions in foreign currency will be converted by sale or such other manner as the Depositary may determine into U.S. Dollars (net of the Depositary's charges and expenses in effecting such conversion) before distribution to Holders. If in the judgment of the Depositary amounts received in foreign currency may not be converted on a reasonable basis into U.S. Dollars transferable to the United States, or may not be so convertible for all of the Holders entitled thereto, the Depositary may in its discretion make such conversion and distribution in U.S. Dollars to the extent reasonable and permissible to the Holders entitled thereto and may distribute the balance in foreign currency to the Holders entitled thereto or hold such balance or all such foreign currency for the Holders entitled thereto (without liability for interest thereon). If any distribution upon any Deposited Securities consists of a dividend in, or free distribution of, Shares, the Depositary may or shall if the Company shall so request, subject to the Deposit Agreement, distribute to the Holders on a record date set by the Depositary therefor of Receipts evidencing American Depositary Shares representing such Deposited Securities, in proportion to the number of American Depositary Shares representing such Deposited Securities held by each of them respectively, additional Receipts for an aggregate number of Depositary Shares representing the number of Shares received as such dividend or free distribution. In lieu of delivering Receipts for fractional American Depositary Shares in the case of any such distribution, the Depositary shall sell the number of Shares represented by the aggregate of such fractions and distribute the net proceeds to the Holders entitled thereto as in the case of a distribution received in cash. If additional Receipts are not so distributed, each American Depositary Share shall thenceforth also represent its proportionate interest in the additional Shares so distributed upon such Deposited Securities. If the Company shall offer or cause to be offered to the holders of any Deposited Securities any rights to -7- 8 subscribe for additional Shares or any rights of any nature, the Depositary shall have discretion as to whether and how such rights are to be made available to the Holders; provided that the Depositary will, if requested by the Company, either (y) make such rights available to Holders by means of warrants or otherwise, if lawful and feasible, or (z) if making such rights available is not lawful or not feasible, or if such rights or warrants are not exercised and appear to be about to lapse, sell such rights or warrants at public or private sale, at such place or places and upon such terms as the Depositary may deem proper, and allocate the proceeds of such sales for account of the Holders otherwise entitled thereto upon an averaged or other practicable basis without regard to any distinctions among such Holders because of exchange restrictions, or the date of delivery of any Receipt or Receipts, or otherwise, and distribute the net proceeds so allocated to the Holders entitled thereto as in the case of a distribution received in cash. The Depositary will distribute to Holders on the record date set by it therefor any distribution on Deposited Securities other than cash, Shares or rights in any manner that the Depositary deems equitable and practicable; provided if in the opinion of the Depositary any distribution other than cash, Shares or rights upon any Deposited Securities cannot be made proportionately among the Holders entitled thereto, or if for any other reason the Depositary deems such distribution not to be feasible, the Depositary may adopt such method as it may deem equitable for the purpose of effecting such distribution, including the sale (at public or private sale) of the securities or property thus received, or any part thereof, and the net proceeds of any such sale will be distributed by the Depositary to the Holders entitled thereto as in the case of a distribution received in cash. The Depositary need not distribute securities, Receipts or rights unless the Company furnishes certain evidence or opinions in respect of United States securities laws (which the Company has no obligation to do). (13) RECORD DATES. Whenever any distribution is being made upon any Deposited Securities or any meeting of holders of Shares or other Deposited Securities is being held or whenever the Depositary shall find it necessary or convenient in connection with the giving of any notice, solicitation of any consent or any other matter, the Depositary will, after consultation with the Company, if practicable, fix a record date for the determination of the Holders who shall be entitled to receive such distribution or the net proceeds of the sale thereof, to give instructions for the exercise of voting rights at any such meeting, to receive such notice or solicitation or act in respect of such other matter, subject to the provisions of the Deposit Agreement. (14) VOTING OF DEPOSITED SECURITIES. As soon as practicable after receipt of notice of any meeting or solicitation of consents or proxies of holders of Shares or other Deposited Securities, at the request of the Company, the Depositary shall mail to Holders a notice containing (a) such information as is contained in such notice and in the solicitation materials, if any, (b) a -8- 9 statement that each Holder at the close of business on a specified record date will be entitled, subject to the provisions of or governing Deposited Securities, to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to Deposited Securities represented by the American Depositary Shares evidenced by such Holders' Receipts and (c) a statement as to the manner in which such instructions may be given, including an express indication that instructions may be given (or be deemed given in accordance with the last sentence of this paragraph if no instruction is received) to the Depositary to give a discretionary proxy to a person designated by the Company. Upon the written request of a Holder on such record date, received on or before the date established by the Depositary for such purpose, the Depositary shall endeavor insofar as practicable and permitted under the provisions of or governing Deposited Securities to vote or cause to be voted (or to grant a discretionary proxy to a person designated by the Company to vote) the Deposited Securities represented by the American Depositary Shares evidenced by such Holder's Receipts in accordance with any instructions set forth in such request. The Depositary will not itself exercise any voting discretion over any Deposited Securities. If no instructions are received by the Depositary from any Holder with respect to any of the Deposited Securities represented by the American Depositary Shares evidenced by such Holder's Receipts on or before the date established by the Depositary for such purpose, the Depositary will deem such Holder to have instructed the Depositary to give a discretionary proxy to a person designated by the Company with respect to such Deposited Securities and the Depositary will give a discretionary proxy to a person designated by the Company to vote such Deposited Securities, provided that no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter as to which the Company informs the Depositary (and the Company agrees to so inform promptly in writing) that (x) the Company does not wish such proxy given, (y) substantial opposition exists or (z) materially affects the rights of holders of Shares. (15) CHANGES AFFECTING DEPOSITED SECURITIES. Upon any change in par value, split-up, consolidation, cancellation or any other reclassification of Deposited Securities, or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting the Company or to which it is a party, any securities that shall be received by the Depositary in exchange for, or in conversion, replacement or otherwise in respect of, Deposited Securities shall be treated as Deposited Securities under the Deposit Agreement; and, the Depositary may with the Company's approval, and shall if the Company shall so request, execute and deliver additional Receipts in respect of such securities as in the case of a dividend of Shares or call for the surrender of outstanding Receipts to be exchanged for new Receipts, reflecting such securities, and to the extent that such additional or new Receipts are not delivered this Receipt shall thenceforth evidence American Depositary Shares representing the right to receive the Deposited Securities including the securities so received. -9- 10 (16) REPORTS; INSPECTION OF REGISTER. The Depositary will make available for inspection by Holders at the Depositary's Office, at the office of the Custodian and at any other designated transfer offices any reports and communications received from the Company which are both (a) received by the Depositary, the Custodian or the nominee of either as the holder of the Deposited Securities and (b) made generally available to the holders of Deposited Securities by the Company. The Depositary will also mail or make available to Holders copies of such reports when furnished by the Company as provided in the Deposit Agreement. The Depositary will keep, at its transfer office in the Borough of Manhattan, The City of New York, a register for the registration of Receipts and their transfer that at all reasonable times will be open for inspection by the Holders and the Company; provided that such inspection shall not be for the purpose of communicating with Holders in the interest of a business or object other than the business of the Company or a matter related to the Deposit Agreement or the Receipts. (17) WITHHOLDING. In connection with any distribution to Holders, the Company will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld by the Company and owing to such authority or agency by the Company; and the Depositary and the Custodian will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld by the Company and owing to such authority or agency by the Depositary or the Custodian. If the Depositary determines that any distribution in property other than cash (including Shares or rights) on Deposited Securities is subject to any tax that the Depositary or the Custodian is obligated to withhold, the Depositary may dispose of all or a portion of such property in such amounts and in such manner as the Depositary deems necessary and practicable to pay such taxes, by public or private sale, and the Depositary shall distribute the net proceeds of any such sale or the balance of any such property after deduction of such taxes to the Holders entitled thereto. (18) LIABILITY OF THE COMPANY AND THE DEPOSITARY. Neither the Depositary nor the Company nor any of their respective directors, employees, agents or affiliates shall incur any liability to any Holder or beneficial owner of any Receipt, if by reason of any provision of any present or future law or regulation of the United States or any other country, or of any other governmental or regulatory authority, or by reason of any provision, present or future, of the [Corporate Document] of the Company, or by reason of any provision of any securities issued or distributed by the Company, or any offering or distribution thereof, or by reason of any act of God or war or other circumstances beyond its control, the Depositary or the Company shall be prevented, delayed or forbidden from or be subject to any civil or criminal penalty on account of doing or performing any act or thing which by the terms of the Deposit -10- 11 Agreement or Deposited Securities it is provided shall be done or performed; nor shall the Depositary or the Company or any of their respective directors, employees, agents or affiliates incur any liability to any Holder or beneficial owner of a Receipt by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or thing which by the terms of the Deposit Agreement it is provided shall or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement. Where, by the terms of a distribution pursuant to Section 4.01, 4.02 or 4.03 of the Deposit Agreement, or an offering or distribution pursuant to Section 4.04 of the Deposit Agreement, such distribution or offering may not be made available to Holders of Receipts, and the Depositary may not dispose of such distribution or offering on behalf of such Holders and make the net proceeds available to such Holders, then the Depositary shall not make such distribution or offering, and shall allow any rights, if applicable, to lapse. Neither the Company nor the Depositary assumes any obligation or shall be subject to any liability under the Deposit Agreement to Holders or beneficial owners of Receipts, except that they agree to perform their obligations specifically set forth in the Deposit Agreement without negligence or bad faith. The Depositary shall not be subject to any liability with respect to the validity or worth of the Deposited Securities. Neither the Depositary nor the Company shall be under any obligation to appear in, prosecute or defend any action, suit, or other proceeding in respect of any Deposited Securities or in respect of the Receipts, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense and liability shall be furnished as often as may be required, and the Custodian shall not be under any obligation whatsoever with respect to such proceedings, the responsibility of the Custodian being solely to the Depositary. Neither the Depositary nor the Company shall be liable for any action or nonaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder or beneficial owner of a Receipt, or any other person believed by it in good faith to be competent to give such advice or information. The Depositary shall not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner in which any such vote is cast or the effect of any such vote, provided that any such action or nonaction is in good faith. The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with a matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises, the Depositary performed its obligations without negligence or bad faith while it acted as Depositary. The Company agrees to indemnify the Depositary, its directors, employees, agents and affiliates and any Custodian against, and hold each of them harmless from, any liability or expense (including, but not limited to, the reasonable expenses of counsel) which may arise out of any registration with the Commission of Receipts, American Depositary Shares or Deposited Securities or the offer or sale thereof in the United States or out of acts performed or omitted, in accordance with the provisions of the Deposit Agreement and of the Receipts, as the same may be amended, modified, or supplemented from time to time, (i) by either the Depositary or a Custodian or their respective directors, employees, agents -11- 12 and affiliates, except for any liability or expense arising out of the negligence or bad faith of either of them, or (ii) by the Company or any of its directors, employees, agents and affiliates. No disclaimer of liability under the Securities Act of 1933 is intended by any provision of the Deposit Agreement. (19) RESIGNATION AND REMOVAL OF DEPOSITARY. The Depositary may at any time resign as Depositary under the Deposit Agreement by written notice of its election so to do delivered to the Company or be removed by the Company by written notice of such removal delivered to the Depositary, such resignation or removal to take effect upon the appointment of and acceptance by a successor Depositary as provided in the Deposit Agreement. The Depositary may, upon written request or written approval of the Company, at any time appoint substitute or additional Custodians and the term "Custodian" refers to each Custodian or all Custodians as the context requires. (20) AMENDMENT OF DEPOSIT AGREEMENT AND RECEIPTS. The Receipts and the Deposit Agreement may be amended by agreement between the Company and the Depositary. Any amendment that shall impose or increase any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs, and expenses of the Depositary in connection with conversion of foreign currency into U.S. Dollars) or that shall otherwise prejudice any substantial existing right of Holders, shall not, however, become effective as to outstanding Receipts until the expiration of 30 days after notice of such amendment shall have been given to the Holders. Every Holder at the expiration of such 30 days shall be deemed by holding such Receipt to consent and agree to such amendment and to be bound by the Deposit Agreement or the Receipt as amended thereby. In no event shall any amendment impair the right of the Holder hereof to surrender this Receipt and receive therefor the Deposited Securities represented hereby, except in order to comply with mandatory provisions of applicable law. (21) TERMINATION OF DEPOSIT AGREEMENT. The Depositary will at any time at the direction of the Company terminate the Deposit Agreement by mailing notice of such termination to the Holders at least 30 days prior to the date fixed in such notice for such termination. The Depositary may terminate the Deposit Agreement, upon the notice set forth in the preceding sentence, at any time after 90 days after the Depositary shall have resigned, provided that no successor Depositary shall within such 90 days have been appointed and accepted its appointment within such 90 days. After the date so fixed for termination, the Depositary will perform no further acts under the Deposit Agreement, except to advise Holders of such termination, receive and hold distributions on Deposited Securities (or sell property or rights or convert Deposited Securities into cash) and deliver Deposited Securities being withdrawn. As soon as practicable after the expiration of one year from the date so fixed -12- 13 for termination, the Depositary shall sell the Deposited Securities and shall thereafter (as long as it may lawfully do so) hold the net proceeds of any such sale, together with any other cash then held by it under the Deposit Agreement, unsegregated and without liability for interest, for the pro rata benefit of the Holders of Receipts not theretofore surrendered. (22) SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITIES. In the Deposit Agreement, the Company has (i) appointed CT Corporation System, 1633 Broadway, New York, New York 10019, in the State of New York, as the Company's authorized agent upon which process may be served in any suit or proceeding arising out of or relating to the Shares or Deposited Securities, the American Depositary Shares, the Receipts or this Agreement, (ii) consented and submitted to the jurisdiction of any state or federal court in the State of New York in which any such suit or proceeding may be instituted, and (iii) agreed that service of process upon said authorized agent shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding (23) COMPLIANCE WITH U.S. SECURITIES LAWS Notwithstanding anything in the Deposit Agreement or this Receipt to the contrary, the Company and the Depositary each agrees that it will not exercise any rights it has under the Deposit Agreement to permit the withdrawal or delivery of Deposited Securities in a manner which would violate the U.S. Securities laws, including, but not limited to, Section I.A.(1) of the General Instructions to the Form F-6 Registration Statement, as amended from time to time, under the Securities Act of 1933. -13- EX-2.3 4 h86436ex2-3.txt AMENDED DEPOSIT AGREEMENT 1 EXHIBIT 2.3 ================================================================================ AMVESCAP PLC THE BANK OF NEW YORK, As Depositary AND HOLDERS OF AMERICAN DEPOSITARY RECEIPTS ---------- Amended and Restated Deposit Agreement Dated as of November 2, 1998 As Further Amended and Restated as of November 8, 2000 ================================================================================ 2 TABLE OF CONTENTS ARTICLE 1. DEFINITIONS............................................................................1 SECTION 1.01. American Depositary Shares.......................................................1 SECTION 1.02. Commission.......................................................................1 SECTION 1.03. Custodian........................................................................2 SECTION 1.04. Deposit Agreement................................................................2 SECTION 1.05. Depositary's Office..............................................................2 SECTION 1.06. Deposited Securities.............................................................2 SECTION 1.07. Holder...........................................................................2 SECTION 1.08. Receipts.........................................................................2 SECTION 1.09. Securities Act of 1933...........................................................2 SECTION 1.10. Shares...........................................................................2 ARTICLE 2. FORM OF RECEIPTS, DEPOSIT OF SHARES, EXECUTION AND TRANSFER OF RECEIPTS AND WITHDRAWAL OF DEPOSITED SECURITIES.............................................................................2 SECTION 2.01. Form and Transferability of Receipts.............................................2 SECTION 2.02. Deposit of Shares................................................................3 SECTION 2.03. Execution and Delivery of Receipts...............................................4 SECTION 2.04. Transfer, Combination and Split-up of Receipts...................................4 SECTION 2.05. Withdrawal of Deposited Securities...............................................4 SECTION 2.06. Limitations on Execution and Delivery and Transfer of Receipts and Withdrawal of Deposited Securities...............................................5 SECTION 2.07. Substitution of Receipts.........................................................6 SECTION 2.08. Pre-Release of Receipts..........................................................6 SECTION 2.09. Cancellation and Destruction of Receipts.........................................7 ARTICLE 3. CERTAIN OBLIGATIONS OF HOLDERS.........................................................7 SECTION 3.01. Information......................................................................7 SECTION 3.02. Liability of Holder for Taxes....................................................7 SECTION 3.03. Warranties on Deposit of Shares..................................................7 SECTION 3.04. Disclosure of Interests..........................................................7 ARTICLE 4. DEPOSITED SECURITIES...................................................................8 SECTION 4.01. Cash Distributions...............................................................8 SECTION 4.02. Share Distributions..............................................................9 SECTION 4.03. Rights Distributions.............................................................9 SECTION 4.04. Other Distributions.............................................................10 SECTION 4.05. Conversion of Foreign Currency..................................................10 SECTION 4.06. Fixing of Record Date...........................................................11 SECTION 4.07. Voting of Deposited Securities..................................................11 SECTION 4.08. Changes Affecting Deposited Securities..........................................12
i 3 SECTION 4.09. Withholding.....................................................................12 ARTICLE 5. THE DEPOSITARY AND THE COMPANY........................................................12 SECTION 5.01. Maintenance of Depositary's Office and Register; Certain Accounts of the Depositary; Lists of Holders.............................................12 SECTION 5.02. Prevention or Delay in Performance..............................................13 SECTION 5.03. Obligations Limited.............................................................14 SECTION 5.04. Resignation and Removal of the Depositary and Appointment of Successor Depositary............................................................14 SECTION 5.05. The Custodian...................................................................14 SECTION 5.06. Notices and Reports to Holders..................................................15 SECTION 5.07. Issuance of Additional Shares, etc..............................................15 SECTION 5.08. Indemnification.................................................................16 SECTION 5.09. Charges of Depositary...........................................................16 SECTION 5.10. Statutory Reports...............................................................17 SECTION 5.11. Available Information to the Commission.........................................17 ARTICLE 6. AMENDMENT AND TERMINATION.............................................................17 SECTION 6.01. Amendment.......................................................................17 SECTION 6.02. Termination.....................................................................18 ARTICLE 7. MISCELLANEOUS.........................................................................18 SECTION 7.01. Counterparts....................................................................18 SECTION 7.02. No Third Party Beneficiaries....................................................18 SECTION 7.03. Severability....................................................................19 SECTION 7.04. Holders Parties: Binding Effect.................................................19 SECTION 7.05. Notices.........................................................................19 SECTION 7.06. Submission to Jurisdiction; Appointment of Agent for Service of Process.........................................................................20 SECTION 7.07. Governing Law...................................................................20 SECTION 7.08. Amended and Restated Receipts...................................................20 SECTION 7.09. Compliance with U.S. Securities Laws............................................20
ii 4 AMENDED AND RESTATED DEPOSIT AGREEMENT dated as of November 2, 1998, as further amended and restated as of November 8, 2000, among AMVESCAP PLC, a corporation organized under the laws of England and Wales and its successors (the "Company"), THE BANK OF NEW YORK, a New York banking corporation, as depositary hereunder and any successor as depositary hereunder (the "Depositary"), and all holders from time to time of American Depositary Receipts issued hereunder. WITNESSETH: WHEREAS, the Company entered into a deposit agreement with Morgan Guaranty Trust Company of New York, as Depositary ("Morgan") thereunder, dated as of January 1, 1993 (as amended from time to time, the "Morgan Deposit Agreement"); and WHEREAS, the Company desires to replace Morgan with The Bank of New York, as Depositary, in accordance with Section 5.04 of the Morgan Deposit Agreement, and for that purpose to amend and restate the Deposit Agreement and the American Depositary Receipts, as herein provided, in accordance with Section 6.01 thereof; and WHEREAS, the Company desires to provide for the deposit of Shares of the Company from time to time with the Depositary or the Custodian and for the execution and delivery of American Depositary Receipts evidencing the American Depositary Shares representing the Shares so deposited; and WHEREAS, the American Depositary Receipts are to be substantially in the form of Exhibit A annexed hereto; NOW, THEREFORE, in consideration of the premises, it is agreed by and among the parties hereto as follows: ARTICLE 1. DEFINITIONS SECTION 1.01. The term "American Depositary Shares" shall mean the rights evidenced by the Receipts executed and delivered hereunder, including the interests in the Deposited Securities granted to the Holders of Receipts pursuant to the terms and conditions of this Deposit Agreement. Each American Depositary Share shall represent rights to receive two (2) Shares until there shall occur a distribution upon Deposited Securities referred to in Section 4.02 or a change in Deposited Securities referred to in Section 4.08 with respect to which additional Receipts are not executed and delivered, and thereafter each American Depositary Share shall represent the right to receive the Deposited Securities specified in such Sections. SECTION 1.02. The term "Commission" shall mean the Securities and Exchange Commission of the United States or any successor governmental agency. 5 SECTION 1.03. The term "Custodian" shall mean one or more agent or agents of the Depositary (singly or collectively, as the context requires) named as Custodian in Exhibit A annexed hereto and any additional or substitute Custodian appointed pursuant to Section 5.05. SECTION 1.04. The term "Deposit Agreement" shall mean this Agreement, as the same may be amended from time to time in accordance with the provisions hereof. SECTION 1.05. The term "Depositary's Office" shall mean the office of the Depositary for the administration of depositary receipts. SECTION 1.06. The term "Deposited Securities" as of any time shall mean all Shares at such time deposited under this Deposit Agreement and any and all other Shares, securities, property and cash received at any time by the Depositary or the Custodian in respect or in lieu of such deposited Shares and other Shares, securities, property and cash at such time held hereunder. SECTION 1.07. The term "Holder" shall mean the person or persons in whose name a Receipt is registered on the register maintained by the Depositary for such purpose. SECTION 1.08. The term "Receipts" shall mean the American Depositary Receipts executed and delivered hereunder, in substantially the form of Exhibit A hereto, evidencing American Depositary Shares, as the same may be amended from time to time in accordance with the provisions hereof. SECTION 1.09. The term "Securities Act of 1933" shall mean the United States Securities Act of 1933, as from time to time amended. The term "Securities Exchange Act of 1934" shall mean the United States Securities Exchange Act of 1934, as from time to time amended. SECTION 1.10. The term "Shares" shall mean the Ordinary Shares, par value 25p each, of the Company and shall include rights to receive Shares. ARTICLE 2. FORM OF RECEIPTS, DEPOSIT OF SHARES, EXECUTION AND TRANSFER OF RECEIPTS AND WITHDRAWAL OF DEPOSITED SECURITIES SECTION 2.01. Form and Transferability of Receipts. (a) Form. Receipts shall be engraved or printed or lithographed on steel-engraved borders and shall be substantially in the form set forth in Exhibit A annexed hereto, with appropriate insertions, modifications and omissions as hereinafter provided. Receipts may be issued in denominations of any number of American Depositary Shares. Receipts shall be executed by the Depositary by the manual or facsimile signature of a duly authorized signatory of the Depositary. Unless so executed, no Receipt shall be entitled to any benefits under this Deposit Agreement or be valid or obligatory for any purpose. The Depositary shall maintain a register in which each Receipt so executed and delivered as hereinafter provided and the transfer of each such Receipt shall be registered. Receipts bearing the facsimile signature of anyone who was at the time of execution a duly authorized signatory of the Depositary shall 2 6 bind the Depositary, notwithstanding that such signatory has ceased to hold such office prior to the delivery of such Receipts. The Receipts may, with the prior written consent of the Company (which consent shall not be unreasonably withheld), be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with this Deposit Agreement as may be required by the Depositary in respect of its obligations hereunder or as may be required to comply with any applicable law or regulations or with the rules and regulations of any securities exchange upon which Receipts may be traded or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Receipts are subject by reason of the date of issuance of the underlying Deposited Securities or otherwise. (b) Transferability. Title to a Receipt (and to the Deposited Securities represented by the American Depositary Shares evidenced thereby), when properly endorsed or accompanied by properly executed instruments of transfer, shall be transferable by delivery with the same effect as in the case of a negotiable instrument under the laws of the State of New York; provided that the Company and the Depositary, notwithstanding any notice to the contrary, may treat the Holder thereof as the absolute owner thereof for the purpose of determining the person entitled to any distribution or notice and for all other purposes. SECTION 2.02. Deposit of Shares. (a) Deposit with Custodian. Shares may be deposited under this Deposit Agreement by delivery thereof to the Custodian, properly endorsed or accompanied by a duly executed instrument or instruments of transfer in form satisfactory to the Custodian, together with any other documents and payments required under this Deposit Agreement, and a written order directing the Depositary to execute and deliver to, or upon the written order of, the person or persons stated in such order a Receipt or Receipts for the number of American Depositary Shares representing such deposited Shares. At the request, risk and expense of any holder of Shares, and for the account of such holder, the Depositary may receive certificates for Shares to be deposited, together with any other documents and payments required under this Deposit Agreement, for the purpose of forwarding such Share certificates to the Custodian for deposit hereunder. (b) Assignment and Proxy. If required by the Depositary, Shares presented for deposit at any time, whether or not any register of Shareholders of the Company is closed, shall also be accompanied by (1) an agreement or assignment, or other instrument satisfactory to the Depositary, which will provide for the prompt transfer to the Custodian or its nominee of any dividend or right to subscribe for additional Shares or to receive other property which any person in whose name the Shares are or have been recorded may thereafter receive upon or in respect of such deposited Shares, or in lieu thereof such agreement of indemnity or other agreement as shall be satisfactory to the Depositary, and (2) if the Shares are registered in the name of the person on whose behalf they are presented for deposit, a proxy or proxies entitling the Custodian to vote such deposited Shares for any and all purposes until the Shares are registered in the name of the Custodian or its nominee. (c) Registration and Holding. Upon each delivery to the Custodian of a certificate or certificates for Shares (or other Deposited Securities pursuant to Section 4.02, 4.03, 3 7 4.04 or 4.08) in registered form to be deposited hereunder, together with any other documents and payments required under this Deposit Agreement, the Custodian shall as soon as practicable present such certificate or certificates for registration of transfer of the Shares (or other Deposited Securities) being deposited in the name of the Custodian or its nominee at the cost and expense of the person making such deposit (or for whose benefit such deposit is made) and shall obtain evidence satisfactory to it of such registration. Deposited Securities shall be held by the Custodian for the account and to the order of the Depositary at such place or places as the Depositary shall determine. SECTION 2.03. Execution and Delivery of Receipts. After the deposit of any Shares pursuant to Section 2.02, the Custodian shall notify the Depositary of such deposit and the person or persons to whom or upon whose written order a Receipt or Receipts are deliverable in respect thereof and the number of American Depositary Shares to be evidenced thereby. Such notification shall be made by letter, first class airmail postage prepaid, or, at the request, risk and expense of the person making the deposit, by cable, telex or facsimile transmission. After receiving such notice from the Custodian, the Depositary, subject to this Deposit Agreement, shall execute and deliver at the Depositary's Office to or upon the order of the person or persons named in the notice delivered to the Depositary, a Receipt or Receipts, registered in the name or names requested by such person or persons, and evidencing in the aggregate the number of American Depositary Shares to which such person or persons are entitled. The Depositary shall execute and deliver Receipts only in accordance with this Section 2.03 and with Sections 2.04, 2.06, 4.02, 4.03 and 4.08. SECTION 2.04. Transfer, Combination and Split-up of Receipts. The Depositary, subject to this Deposit Agreement, shall register transfers of Receipts in the Receipt register from time to time upon any surrender of a Receipt at any of its designated transfer offices by the Holder in person or by duly authorized attorney, properly endorsed or accompanied by proper instruments of transfer, and duly stamped as may be required by applicable law. Thereupon the Depositary shall execute a new Receipt or Receipts and deliver the same to or upon the order of the person entitled thereto evidencing the same aggregate number of American Depositary Shares as those evidenced by the Receipts surrendered. The Depositary, subject to this Deposit Agreement, shall upon surrender at any of its designated transfer offices of a Receipt or Receipts for the purpose of effecting a split-up or combination of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for any authorized number of American Depositary Shares requested, evidencing the same aggregate number of American Depositary Shares as those evidenced by the Receipt or Receipts surrendered. The Depositary may close the register at any time or from time to time, when deemed expedient by it in connection with the performance of its duties hereunder or at the request of the Company. SECTION 2.05. Withdrawal of Deposited Securities. Upon surrender of a Receipt (properly endorsed in blank or accompanied by proper instruments of transfer in blank, to the extent required by the Depositary), at the Depositary's Office or at such other offices as it may designate, together with the Holder's 4 8 written order directing the Depositary to cause the Deposited Securities represented by the American Depositary Shares evidenced by such Receipt to be withdrawn and delivered to or upon the written order of the person or persons designated in such order, the Depositary shall direct the Custodian to deliver without unreasonable delay, subject to this Deposit Agreement and to the provisions of or governing Deposited Securities, to or upon the written order of the person or persons designated in such order, the Deposited Securities at the time represented by the American Depositary Shares evidenced by such Receipt, and the Custodian shall so deliver such Deposited Securities, at the office of the Custodian, except that the Depositary may, in its discretion, at the request, risk and expense of the Holder make delivery of such Deposited Securities without unreasonable delay to such person or persons at the Depositary's Office or at any other place specified by the Holder in such order. Directions shall be given by letter or, at the request, risk and expense of the Holder, by cable, telex or facsimile transmission. Delivery of Deposited Securities may be made by the delivery of certificates, to the extent such Deposited Securities may be represented by certificates, which, if required by law, shall be properly endorsed or accompanied by properly executed instruments of transfer, and if such certificates may be so registered, registered in the name of such Holder, or as ordered by such Holder or properly endorsed or accompanied by proper instruments of transfer. Notwithstanding any provision of this Deposit Agreement or the Receipts, the Depositary may restrict withdrawals of Deposited Securities only for the reasons set forth in General Instruction I.A.(l) to Form F-6 under the Securities Act to 1933. SECTION 2.06. Limitations on Execution and Delivery and Transfer of Receipts and Withdrawal of Deposited Securities. As a condition precedent to the execution and delivery, registration, registration of transfer, split-up or combination of any Receipt, the delivery of any distribution thereon or, subject to the last sentence of Section 2.05, the withdrawal of any Deposited Securities, the Depositary, the Company or the Custodian may require of the Holder, the presentor of the Receipt or the depositor of Shares: (a) payment of a sum sufficient to pay or reimburse it for payment of (i) any stock transfer or other tax or other governmental charge with respect thereto, (ii) any stock transfer or registration fees for the registration of transfers of Shares or other Deposited Securities upon any applicable register and (iii) any charges of the Depositary upon delivery of Receipts against deposits of Shares and upon withdrawal of Deposited Securities against surrender of Receipts set forth in Exhibit B to this Deposit Agreement; (b) the production of proof satisfactory to it as to the identity and genuineness of any signature and as to any other matter contemplated by Section 3.01; and, (c) compliance with such reasonable regulations, if any, as the Depositary and the Company may establish consistent with the provisions of this Deposit Agreement. The delivery of Receipts against deposits of Shares may be suspended, deposits of Shares may be refused, or the registration of transfer of Receipts, their split-up or combination or, subject to the last sentence of Section 2.05, the withdrawal of Deposited Securities may be suspended, in particular instances or generally, when the Receipt register or any register for Shares or other Deposited Securities is closed, or any time or from time to time when any such action is deemed necessary or advisable by the Depositary or the Company for any reason, including without limitation any requirement of law or of any government or governmental body or commission, any provision of this Deposit Agreement or the provisions of or governing Deposited Securities, any meeting of Shareholders or any payment of dividends. The Depositary may issue Receipts against rights to receive Shares from the Company, or any 5 9 registrar, transfer agent, clearing agency or other entity recording Share ownership or transactions. Without limitation of the foregoing, the Depositary shall not knowingly accept for deposit under this Deposit Agreement any Shares required to be registered pursuant to the provisions of the Securities Act of 1933, unless a registration statement under the Securities Act of 1933 is in effect as to such Shares. The Depositary will use reasonable efforts to comply with written instructions of the Company to not accept for deposit hereunder any Shares identified in such instructions at such times and under such circumstances as may reasonably be specified in such instructions in order to facilitate the Company's compliance with the securities laws in the United States. SECTION 2.07. Substitution of Receipts. In case any Receipt shall be mutilated, destroyed, lost or stolen, the Depositary shall execute and deliver a new Receipt of like tenor, in exchange and substitution for such mutilated Receipt upon cancellation thereof, or in lieu of and in substitution for such destroyed or lost or stolen Receipt, unless the Depositary has notice that such Receipt has been acquired by a bona fide purchaser, upon the Holder thereof filing with the Depositary (a) a request for such execution and delivery and (b) a sufficient indemnity bond and satisfying any other reasonable requirements imposed by the Depositary, including, without limitation, evidence satisfactory to the Depositary of such destruction or loss or theft of such Receipt, the authenticity thereof and the Holder's ownership thereof. SECTION 2.08. Pre-Release of Receipts. Notwithstanding Section 2.03 hereof, the Depositary may execute and deliver Receipts prior to the receipt of Shares pursuant to Section 2.02 (a "Pre-Release"). The Depositary may, pursuant to Section 2.05, deliver Shares upon the receipt and cancellation of Receipts which have been Pre-Released, whether or not such cancellation is prior to the termination of such Pre-Release or the Depositary knows that such Receipt has been Pre-Released. The Depositary may receive Receipts in lieu of Shares in satisfaction of a Pre-Release. Each Pre-Release will be (a) preceded or accompanied by a written representation from the person to whom Receipts or Shares are to be delivered, that such person, or its customer, owns the Shares or Receipts to be remitted, as the case may be, (b) at all times fully collateralized with cash or such other collateral as the Depositary deems appropriate, (c) terminable by the Depositary on not more than five (5) business days notice, and (d) subject to such further indemnities and credit regulations as the Depositary deems appropriate. The number of American Depositary Shares which are outstanding at any time as a result of Pre-Release will not normally exceed thirty percent (30%) of the Shares deposited hereunder; provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate. The Depositary may retain for its own account any compensation received by it in connection with the foregoing. 6 10 SECTION 2.09. Cancellation and Destruction of Receipts. All Receipts surrendered to the Depositary shall be cancelled by the Depositary. The Depositary is authorized to destroy Receipts so cancelled. ARTICLE 3. CERTAIN OBLIGATIONS OF HOLDERS SECTION 3.01. Information. Any person presenting Shares for deposit or any Holder of a Receipt may be required from time to time to file with the Depositary or the Custodian such proof as to citizenship, residence, exchange control approval, legal or beneficial ownership of Receipts, Deposited Securities or other securities, compliance with all applicable laws and regulations, all applicable provisions of or governing Deposited Securities, and the terms of this Deposit Agreement, or other information, and to execute and deliver to the Depositary or the Custodian such certificates, including such representations and warranties, as the Depositary may deem necessary or proper or as the Company may require by written request to the Depositary or the Custodian. The Depositary may withhold the delivery or registration of transfer of any Receipt or any distribution on any Deposited Securities represented by the American Depositary Shares evidenced by such Receipt until the foregoing is accomplished to the Company's and the Depositary's satisfaction. SECTION 3.02. Liability of Holder for Taxes. If any tax or other governmental charge shall become payable by or on behalf of the Custodian or the Depositary with respect to any Receipt or any Deposited Securities represented by the American Depositary Shares evidenced by such Receipt, such tax or other governmental charge shall be payable by the Holder of such Receipt, who shall pay the amount thereof to the Depositary. The Depositary may refuse to effect registration of transfer of such Receipt or any split-up or combination thereof or any withdrawal of such Deposited Securities until such payment is made, and may withhold or deduct from any distributions on such Deposited Securities or may sell for the account of the Holder thereof any part or all of such Deposited Securities (after attempting by reasonable means to notify such Holder prior to such sale), and may apply such cash or the proceeds of any such sale in payment of such tax or other governmental charge, the Holder of such Receipt remaining liable for any deficiency. SECTION 3.03. Warranties on Deposit of Shares. Every person depositing Shares under this Deposit Agreement shall be deemed thereby to represent and warrant that such Shares and each certificate therefor are validly issued and outstanding, fully paid, nonassessable and free of preemptive rights, that the person making such deposit is duly authorized so to do and that no registration under the Securities Act of 1933 is required in connection with the public offer and sale of such Shares or of the American Depositary Shares representing such Shares. Such representations and warranties shall survive the deposit of Shares and the execution and delivery of Receipts therefor. SECTION 3.04. Disclosure of Interests. 7 11 Notwithstanding any other provision of this Deposit Agreement, and without prejudice to the disclosure obligations in respect of Shares contained in the Companies Act 1985 of Great Britain, as amended or supplemented from time to time, or any successor thereto (the "Companies Act"), (i) each Holder (a) agrees to comply with requests from the Company, which are made under statutory provisions in the United Kingdom to provide information as to the capacity in which such Holder owns Receipts and regarding the identity of any other person interested in such Receipts and the nature of such interest, and (b) may, pursuant to such statutory provisions and any provisions of the Memorandum and Articles of Association of the Company, forfeit the right to direct the voting of, the right to receive dividends, and be prohibited from transferring Shares as to which compliance is not made, all as if such Receipts were to the extent practicable the Shares represented thereby, and (ii) the Depositary agrees to use its reasonable efforts to comply with any instructions received from the Company requesting that the Depositary take the reasonable actions specified therein to obtain such information and the Company agrees to pay the expenses and charges of the Depositary in connection with such efforts. In addition, and without prejudice to the disclosure obligations in respect of Shares contained in the Companies Act, any Holder of a Receipt who is or becomes directly or indirectly interested (within the meaning of the Companies Act) in the issued share capital of the Company equal to or in excess of the "notifiable percentage" (at the date hereof, three percent) referred to in the Companies Act, or is aware that another person for whom it holds such Receipt is so interested, shall within two days after becoming so interested or so aware, and thereafter upon certain changes in such interest, notify the Company as required by the Companies Act 1985. ARTICLE 4. DEPOSITED SECURITIES SECTION 4.01. Cash Distributions. Whenever the Depositary or the Custodian shall receive any cash dividend or other cash distribution upon any Deposited Securities, the Depositary shall, after any necessary conversion of such distribution into U.S. dollars pursuant to Section 4.05 and after fixing a record date in respect thereof pursuant to Section 4.06. subject to this Deposit Agreement, distribute the amount thus received, by checks drawn on a bank in the United States, to the Holders on such record date of Receipts evidencing American Depositary Shares representing such Deposited Securities, in proportion to the number of American Depositary Shares representing such Deposited Securities held by each of them respectively; provided that the Depositary shall make appropriate adjustments in the amounts so distributed in respect of (a) any of such Deposited Securities being not entitled, by reason of its date of issuance or otherwise, to receive all or any portion of such distribution or (b) any amounts (i) required to be withheld by the Company, the Custodian or the Depositary from any such distribution on account of taxes, or (ii) charged by the Depositary in connection with the conversion of foreign currency into U.S. dollars pursuant to Section 4.05. The Depositary shall distribute only such amount as can be distributed without distributing to any Holder a fraction of one cent, and any balance not so distributable shall be held by the Depositary (without liability for interest thereon) and shall be added to and become part of the next sum received by the Depositary for distribution to Holders of Receipts then outstanding. 8 12 SECTION 4.02. Share Distributions. If any distribution upon any Deposited Securities consists of a dividend in, or free distribution of, Shares, the Depositary may or shall, if the Company shall so request, subject to this Deposit Agreement, distribute to the Holders on a record date fixed pursuant to Section 4.06 of Receipts evidencing American Depositary Shares representing such Deposited Securities, in proportion to the number of American Depositary Shares representing such Deposited Securities held by each of them respectively, additional Receipts for an aggregate number of American Depositary Shares representing the number of Shares received as such dividend or free distribution. In lieu of delivering Receipts for fractional American Depositary Shares in the case of any such distribution, the Depositary shall sell the amount of Shares represented by the aggregate of such fractions and distribute the net proceeds of such sale as in the case of a distribution received in cash pursuant to Section 4.01. If additional Receipts are not so distributed, each American Depositary Share shall thenceforth also represent its proportionate interest in the additional Shares so distributed upon such Deposited Securities. SECTION 4.03. Rights Distributions. If the Company shall offer or cause to be offered to the holders of any Deposited Securities any rights to subscribe for additional Shares or any rights of any nature, the Depositary shall have discretion as to the procedure to be followed in making such rights available to the Holders or in disposing of such rights and distributing the net proceeds thereof as in the case of a distribution received in cash pursuant to Section 4.01; provided that the Depositary shall, if requested by the Company, subject to this Deposit Agreement take action as follows: (a) if at the time of the offering of any such rights the Depositary determines that it is lawful and feasible to make such rights available to Holders by means of warrants or otherwise, the Depositary shall distribute such warrants or other instruments therefor in such form as it may determine to the Holders on a record date fixed pursuant to Section 4.06 of Receipts evidencing American Depositary Shares representing such Deposited Securities, in proportion to the number of American Depositary Shares representing such Deposited Securities held by each of them respectively, or employ such other method as it may deem feasible in order to facilitate the exercise, sale or transfer of rights by such Holders; or (b) if at the time of any such offering of any such rights the Depositary determines that it is not lawful or not feasible to make such rights available to Holders by means of warrants or otherwise, or if the rights represented by such warrants or such other instruments are not exercised and appear to be about to lapse, the Depositary in its discretion may sell such rights or such warrants or other instruments at public or private sale, at such place or places and upon such terms as it may deem proper, and may allocate the proceeds of such sales for account of the Holders otherwise entitled to such rights, warrants or other instruments, upon an averaged or other practicable basis without regard to any distinctions among such Holders because of exchange restrictions, or the date of delivery of any Receipt or Receipts, or otherwise, and distribute the net proceeds so allocated to the extent practicable as in the case of a distribution received in cash pursuant to Section 4.01. The Depositary will not offer such rights to Holders having an address in the United States, unless the Company furnishes to the Depositary (i) evidence that a registration statement under the Securities Act of 1933 covering such offering is in effect or (ii) an opinion of counsel for the Company in the United States satisfactory to the Depositary to the effect that such offering does not require registration under the Securities Act of 1933. 9 13 SECTION 4.04. Other Distributions. Whenever the Depositary or the Custodian shall receive any distribution other than cash, Shares or rights upon any Deposited Securities, subject to this Deposit Agreement, the Depositary shall cause securities or property to be distributed to the Holders on a record date fixed pursuant to Section 4.06 of Receipts evidencing American Depositary Shares representing such Deposited Securities, in proportion to the number of American Depositary Shares representing such Deposited Securities held by each of them respectively, in any manner that the Depositary may deem equitable and practicable for accomplishing such distribution; provided that if in the opinion of the Depositary such distribution cannot be made proportionately among the Holders entitled thereto, or if for any other reason (including any tax withholding or securities laws requirement) the Depositary deems such distribution not to be feasible, the Depositary may adopt such method as it may deem equitable and practicable for the purpose of effecting such distribution, including the sale (at public or private sale) of the securities or property thus received, or any part thereof, and the distribution by the Depositary to the Holders of the net proceeds of any such sale as in the case of a distribution received in cash pursuant to Section 4.01. SECTION 4.05. Conversion of Foreign Currency. Whenever the Depositary or the Custodian shall receive foreign currency, as a cash dividend or other distribution or as the net proceeds from the sale of securities, property or rights, which, in the judgment of the Depositary can then be converted on a reasonable basis into U.S. dollars which can then be transferred to the United States, the Depositary shall convert or cause to be converted, by sale or in any other manner that it may determine, such foreign currency into U.S. dollars and shall transfer the resulting U.S. dollars (net of its charges and expenses in effecting such conversion) to the United States. Such U.S. dollars shall be distributed to the Holders entitled thereto or, if the Depositary shall have distributed any warrants or other instruments that entitle the holders thereof to such U.S. dollars, then to the holders of such warrants or instruments, as applicable, upon surrender thereof for cancellation. Such distribution may be made upon an averaged or other practicable basis without regard to any distinctions among Holders on account of exchange restrictions or otherwise. If such conversion or distribution can be effected only with the approval or license of any government or agency thereof, the Depositary shall file such application for approval or license, if any, as it may deem desirable. If at any time the Depositary shall determine that in its judgment any foreign currency received by the Depositary is not convertible on a reasonable basis into U.S. dollars transferable to the United States, or if any approval or license of any governmental authority or agency thereof that is required for such conversion is denied or in the opinion of the Depositary is not obtainable at a reasonable cost or within a reasonable period, the Depositary shall in its discretion, but subject to applicable laws and regulations, either distribute the foreign currency (or an appropriate document evidencing the right to receive such foreign currency) to, or hold such foreign currency (without liability for interest thereon) for the respective accounts of, the Holders entitled to receive the same. If any such conversion of foreign currency, in whole or in part, can be effected for distribution to some but not all of the Holders entitled thereto, the Depositary may in its discretion make such conversion and distribution in U.S. dollars to the extent permissible to the Holders entitled thereto and may distribute the balance of the foreign currency received by the Depositary to, or hold such balance (without liability of or interest 10 14 thereon) for the respective accounts of, the Holders entitled thereto for whom such conversion and distribution is not practicable. SECTION 4.06. Fixing of Record Date. Whenever any distribution is being made upon any Deposited Securities or any meeting of holders of Shares or other Deposited Securities is being held or whenever the Depositary shall find it necessary or convenient in connection with the giving of any notice, solicitation of any consent or any other matter, the Depositary shall, after consultation with the Company, if practicable, fix a record date for the determination of the Holders of Receipts evidencing the American Depositary Shares representing such Deposited Securities who shall be entitled to receive such distribution or the net proceeds of the sale thereof, to give instructions for the exercise of voting rights at any such meeting, to receive such notice or solicitation or to act in respect of such other matter. Subject to this Deposit Agreement, only such Holders at the close of business on such record date shall be entitled to receive any such distribution or proceeds, to give such voting instructions, to receive such notice or solicitation or to act in respect of any such other matter. SECTION 4.07. Voting of Deposited Securities. As soon as practicable after receipt of notice of any meeting or solicitation of consents or proxies of holders of Shares or other Deposited Securities, at the request of the Company, the Depositary shall mail to Holders a notice containing (a) such information as is contained in such notice and in the solicitation materials, if any, (b) a statement that each Holder at the close of business on a specified record date will be entitled, subject to the provisions of or governing Deposited Securities, to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Deposited Securities represented by the American Depositary Shares evidenced by such Holders' Receipts, and (c) a statement as to the manner in which such instructions may be given, including an express indication that instructions may be given (or be deemed given in accordance with the last sentence of this Section if no instruction is received) to the Depositary to give a discretionary proxy to a person designated by the Company. Upon the written request of a Holder on such record date, received on or before the date established by the Depositary for such purpose, the Depositary shall endeavor insofar as practicable and permitted under the provisions of or governing Deposited Securities to vote or cause to be voted (or to grant a discretionary proxy to a person designated by the Company to vote) the Deposited Securities represented by the American Depositary Shares evidenced by such Holder's Receipts in accordance with any instructions set forth in such request. The Depositary shall not itself exercise any voting discretion over any Deposited Securities. If no instructions are received by the Depositary from any Holder with respect to any of the Deposited Securities represented by the American Depositary Shares evidenced by such Holder's Receipts on or before the date established by the Depositary for such purpose, the Depositary shall deem such Holder to have instructed the Depositary to give a discretionary proxy to a person designated by the Company with respect to such Deposited Securities and the Depositary shall give a discretionary proxy to a person designated by the Company to vote such Deposited Securities, provided that no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter as to which the Company informs the Depositary (and the Company agrees to provide 11 15 such information promptly in writing) that (x) the Company does not wish such proxy given, (y) substantial opposition exists or (z) materially affects the rights of holders of Shares. SECTION 4.08. Changes Affecting Deposited Securities. Upon any change in par value, split-up, consolidation, cancellation or any other reclassification of Deposited Securities, or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting the Company or to which it is a party, any securities that shall be received by the Depositary in exchange for, or in conversion, replacement, or otherwise in respect of, Deposited Securities shall be treated as Deposited Securities under this Deposit Agreement, and the Receipts shall thenceforth evidence American Depositary Shares representing the right to receive the Deposited Securities including the securities so received to the extent additional Receipts are not delivered pursuant to the following sentence. In any such case the Depositary may with the Company's approval, and shall if the Company shall so request, subject to this Deposit Agreement, execute and deliver additional Receipts as in the case of a dividend of Shares, or call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing such newly received Deposited Securities. SECTION 4.09. Withholding. In connection with any distribution to Holders, the Company will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld by the Company and owing to such authority or agency by the Company; and the Depositary and the Custodian will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or agency by the Depositary or the Custodian. The Depositary will forward to the Company such information from its records as the Company may reasonably request to enable the Company to file necessary reports with governmental authorities or agencies, and either the Company or the Depositary may file any such reports necessary to obtain benefits under any applicable tax treaties for Holders. If the Depositary determines that any distribution in property other than cash (including Shares or rights) on Deposited Securities is subject to any tax that the Depositary or the Custodian is obligated to withhold, the Depositary may dispose of all or a portion of such property in such amounts and in such manner as the Depositary deems necessary and practicable to pay such taxes, by public or private sale, and the Depositary shall distribute the net proceeds of any such sale or the balance of any such property after deduction of such taxes to the Holders entitled thereto as in the case of a distribution pursuant to Section 4.01, 4.02, 4.03 or 4.04. ARTICLE 5. THE DEPOSITARY AND THE COMPANY SECTION 5.01. Maintenance of Depositary's Office and Register; Certain Accounts of the Depositary; Lists of Holders. (a) Depositary's Office. The Depositary or its agent shall maintain at its transfer office in the Borough of Manhattan, The City of New York, facilities for the delivery and surrender of Shares, the execution and delivery, registration, registration of transfer, combination and split-up of Receipts and the withdrawal of Deposited Securities all in accordance with the provisions of this Deposit Agreement. 12 16 (b) The Register. The Depositary or its agent shall keep at its transfer office in the Borough of Manhattan, The City of New York, a register for the registration of Receipts and transfers of Receipts that at all reasonable times shall be open for inspection by the Holders and the Company; provided that such inspection shall not be for the purpose of communicating with Holders in the interest of a business or object other than the business of the Company or a matter related to this Deposit Agreement or the Receipts. (c) Receipt Registrars and Co-Transfer Agents. If any Receipts or the American Depositary Shares evidenced thereby are listed on one or more stock exchanges in the United States, the Depositary or its agent shall act as Receipt registrar or, upon the written request or with the written approval of the Company, the Depositary shall appoint a Receipt registrar or one or more co-registrars to register Receipts and transfers, combinations and split-ups of Receipts and to countersign Receipts in accordance with any requirements of such exchange or exchanges and with the terms of any such appointment. Such Receipt registrar or co-registrars may be removed and a substitute or substitutes appointed by the Depositary upon the written request or with the written approval of the Company. The Depositary, upon the written request or with the written approval of the Company, may appoint one or more co-transfer agents for the purpose of effecting transfers, combinations and split-ups of Receipts at designated transfer offices on behalf of the Depositary. Such co-transfer agents may be removed and substitutes appointed by the Depositary upon the written request or with the written approval of the Company. Each Receipt registrar, co-registrar or co-transfer agent appointed under this Section 5.01 (other than The Bank of New York) shall give notice in writing to the Company and the Depositary accepting such appointment and agreeing to be bound by the applicable terms of this Deposit Agreement. (d) Lists of Holders. At the expense of the Company, the Company shall have the right to inspect transfer and registration records of the Depositary or its agent, take copies thereof and require the Depositary or its agent, the Receipt registrar and any co-transfer agents or co-registrars to supply copies of such portions of such records as the Company may request. The Depositary or its agent shall furnish to the Company promptly upon the written request of the Company, a list of the names, addresses and holdings of American Depositary Shares by all Holders as of a recent date within seven days of the date of such request. SECTION 5.02. Prevention or Delay in Performance. Neither the Depositary, its agents nor the Company shall incur any liability if, by reason of any present or future law, the provisions of or governing any Deposited Securities, act of God, war or other circumstances beyond its control, the Depositary, its agents or the Company shall be prevented or forbidden from, or subjected to any civil or criminal penalty on account of, or delayed in, doing or performing any act or thing which by the terms of this Deposit Agreement it is provided shall be done or performed; nor shall the Depositary, its agents or the Company incur any liability to any Holder or other person by reason of any nonperformance or delay, caused as aforesaid, in performance of any act or thing that by the terms of this Deposit Agreement it is provided shall or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in this Deposit Agreement. 13 17 SECTION 5.03. Obligations Limited. The Company assumes no obligation nor shall it be subject to any liability under this Deposit Agreement to Holders or beneficial owners, except that it agrees to perform its obligations specifically set forth in this Deposit Agreement without negligence or bad faith. The Depositary assumes no obligation nor shall it be subject to any liability under this Deposit Agreement to any Holder or beneficial owner (including, without limitation, liability with respect to the validity or worth of the Deposited Securities), except that it agrees to perform its obligations specifically set forth in this Deposit Agreement without negligence or bad faith. None of the Depositary, the Custodian or the Company shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or in respect of the Receipts, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense and liability shall be furnished as often as may be required. Neither the Depositary nor the Company shall be liable for any action or nonaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder or beneficial owner or any other person believed by it in good faith to be competent to give such advice or information. The Depositary shall not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner in which any such vote is cast or the effect of any such vote, provided that any such action or nonaction is in good faith. No disclaimer of liability under the Securities Act of 1933 is intended by any provision of this Deposit Agreement. SECTION 5.04. Resignation and Removal of the Depositary and Appointment of Successor Depositary. The Depositary may at any time resign as Depositary hereunder by written notice of its election so to do delivered to the Company or be removed as Depositary by the Company by written notice of such removal delivered to the Depositary, such resignation or removal to take effect upon the appointment of and acceptance by a successor depositary as hereinafter provided. In case at any time the Depositary acting hereunder shall resign or be removed, the Company shall use its best efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, The City of New York. Every successor depositary shall execute and deliver to its predecessor and to the Company an instrument in writing accepting its appointment hereunder, and thereupon such successor depositary, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor; but such predecessor, nevertheless, upon payment of all sums due it and on the written request of the Company shall execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder, and such predecessor shall thereupon duly assign, transfer and deliver all right, title and interest in the Deposited Securities to such successor, and shall deliver to such successor a list of the Holders. Any such successor depositary shall promptly mail notice of its appointment to the Holders. Any corporation into or with which the Depositary may be merged or consolidated shall be the successor of the Depositary without the execution or filing of any document or any further act. SECTION 5.05. The Custodian. 14 18 The Depositary, upon the written request or with the written approval of the Company, may from time to time appoint one or more agents to act for it as Custodian hereunder. Each Custodian so appointed (other than The Bank of New York) shall give notice in writing to the Company and the Depositary accepting such appointment and agreeing to be bound by the applicable terms hereof. Any Custodian in acting hereunder shall be subject at all times and in all respects to the directions of the Depositary and shall be responsible solely to it. Any Custodian may resign from its duties hereunder by notice of such resignation delivered to the Depositary at least 30 days prior to the date on which such resignation is to become effective. The Depositary may discharge any Custodian at any time upon notice to the Custodian being discharged. Any Custodian ceasing to act hereunder as Custodian shall deliver all Deposited Securities held by it to a Custodian continuing to act upon the instruction of the Depositary. The Depositary shall give notice in writing to all Holders of the name and location of the appointment of any Custodian not named in the Receipts. Upon the appointment of any successor depositary hereunder, any Custodian then acting hereunder shall forthwith become, without any further act or writing, the agent hereunder of such successor depositary and the appointment of such successor depositary shall in no way impair the authority of any Custodian hereunder; but the successor depositary so appointed shall, nevertheless, on the written request of any Custodian, execute and deliver to such Custodian all such instruments as may be proper to give to the Custodian full and complete power and authority as agent hereunder of such successor depositary. SECTION 5.06. Notices and Reports to Holders. On or before the first date on which the Company gives notice, by publication or otherwise, of any meeting of holders of Shares or other Deposited Securities, or of any adjourned meeting of such holders, or of the taking of any action by such holders other than at a meeting, the Company shall transmit to the Custodian a copy of the notice thereof in the form given or to be given to holders of Shares or other Deposited Securities. The Depositary will, at the Company's expense, arrange for the prompt transmittal by the Custodian to the Depositary of such notices and of any reports and other communications that are made generally available by the Company to holders of its Shares or other Deposited Securities and arrange for the mailing, at the Company's expense, of copies thereof to all Holders or, at the request of the Company, make such notices, reports and other communications available to all Holders on a basis similar to that for holders of Shares or other Deposited Securities, or on such other basis as the Company may advise the Depositary may be required by any applicable law, regulation or stock exchange requirement. The Company has delivered to the Depositary and the Custodian a copy of the provisions of or governing the Shares and any other Deposited Securities issued by the Company or any affiliate of the Company, and promptly upon any amendment thereto or change therein, the Company shall deliver to the Depositary and the Custodian a copy of such provisions as so amended or changed. The Depositary may rely upon such copy for all purposes of this Agreement. The Depositary will, at the expense of the Company, make such copy and such notices, reports and other communications available for inspection by Holders at the Depositary's Office, at the office of the Custodian and at any other designated transfer offices. SECTION 5.07. Issuance of Additional Shares, etc. 15 19 Neither the Company nor any company controlling, controlled by or under common control with the Company shall issue additional Shares, rights to subscribe for Shares, securities convertible into or exchangeable for Shares, or rights to subscribe for any such securities or shall deposit any Shares under this Deposit Agreement, except under circumstances complying in all respects with the Securities Act of 1933. The Depositary will use reasonable efforts to comply with written instructions of the Company not to accept for deposit hereunder any Shares identified in such instructions at such times and under such circumstances as may reasonably be specified in such instructions in order to facilitate the Company's compliance with securities laws in the United States. The Company agrees with the Depositary that neither the Company nor any company controlled by, controlling or under common control with the Company will at any time deposit any Shares, either originally issued or previously issued and reacquired by the Company or any such affiliate, the public offer and sale of which is required to be registered under the Securities Act of 1933, unless a Registration Statement is in effect as to such Shares under the Securities Act of 1933. SECTION 5.08. Indemnification. The Company agrees to indemnify the Depositary, its directors, employees, agents and affiliates and any Custodian against, and hold each of them harmless from, any liability or expense (including, but not limited to, the reasonable fees and expenses of counsel) which may arise out of any registration with the Commission of Receipts, American Depositary Shares or Deposited Securities or the offer or sale thereof in the United States or out of acts performed or omitted, in accordance with the provisions of this Deposit Agreement and of the Receipts, as the same may be amended, modified or supplemented from time to time, (i) by either the Depositary or a Custodian or their respective directors, employees, agents and affiliates, except to the extent any liability or expense arises out of the negligence or bad faith of any of them, or (ii) by the Company or any of its directors, employees, agents and affiliates. The Depositary agrees to indemnify the Company, its directors, employees, agents and affiliates and hold them harmless from any liability or expense (including, but not limited to, the reasonable fees and expenses of counsel) which may arise out of acts performed or omitted by the Depositary or its Custodian or their respective directors, employees, agents and affiliates due to their negligence or bad faith. The obligations set forth in this Section 5.08 shall survive the termination of this Deposit Agreement and the succession or substitution of any indemnified person. SECTION 5.09. Charges of Depositary. The Company agrees to pay the fees, reasonable expenses and out-of-pocket charges of the Depositary and those of any Registrar only in accordance with agreements in writing entered into between the Depositary and the Company from time to time. The Depositary shall present its statement for such charges and expenses to the Company once every three months. The charges and expenses of the Custodian are for the sole account of the Depositary. 16 20 The following charges shall be incurred by any party depositing or withdrawing Shares or by any party surrendering Receipts or to whom Receipts are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the Receipts or Deposited Securities or a distribution of Receipts pursuant to Section 4.03), whichever applicable: (1) stock transfer or other taxes and other governmental charges, (2) cable, telex, facsimile transmission and delivery charges incurred at the request of any such party, (3) transfer or registration fees for the registration of transfers of deposited Shares and other Deposited Securities on any applicable register in the name of the Depositary or its nominee or the Custodian or its nominee in connection with the deposit of Shares or in the name of such person as a Holder may direct in connection with the withdrawal of Deposited Securities (that are payable by persons depositing Shares or Holders withdrawing Deposited Securities; there are no such fees payable by such persons or Holders in respect of the Shares as of the date hereof), (4) expenses of the Depositary in connection with the conversion of foreign currency into U.S. dollars and (5) a fee of $5.00 or less per 100 American Depositary Shares (or portion thereof) for the execution and delivery of Receipts pursuant to Section 2.03, 4.03 or 4.04 and the surrender of Receipts pursuant to Section 2.05 or 6.02. The Depositary, subject to Section 2.08 hereof, may own and deal in any class of securities of the Company and its affiliates and in Receipts. SECTION 5.10. Statutory Reports. The Depositary shall make available for inspection by Holders at the Depositary's Office, at the office of the Custodian and at any other designated transfer offices any reports and communications received from the Company which are both (a) received by the Depositary, the Custodian or the nominee of either as the holder of Deposited Securities and (b) made generally available to the holders of Deposited Securities by the Company. In connection with any registration statement relating to the Receipts or with any undertaking contained therein, the Company and the Depositary shall each furnish to the other and to the Commission such information as shall be required to make such filings or comply with such undertakings. SECTION 5.11. Available Information to the Commission. The Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934 and accordingly files certain reports with the Commission. Such reports and other information may be inspected and copied at public reference facilities maintained by the Commission located at the date of the Deposit Agreement at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. ARTICLE 6. AMENDMENT AND TERMINATION SECTION 6.01. Amendment. The Receipts and any provisions of this Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary in any respect. Any amendment that shall impose or increase any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, cable, telex of facsimile transmission costs, delivery costs, and expenses of the Depositary in connection 17 21 with conversion of foreign currency into U.S. dollars) or that shall otherwise prejudice any substantial existing right of Holders, shall not, however, become effective as to outstanding Receipts until the expiration of 30 days after notice of such amendment shall have been given to the Holders. Every Holder at the expiration of 30 days after such notice shall be deemed by holding such Receipt to consent and agree to such amendment and to be bound by the Deposit Agreement or the Receipts as amended thereby. In no event shall any amendment impair the right of the Holder of any Receipt to surrender such Receipt and receive therefor the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law. SECTION 6.02. Termination. The Depositary shall at any time at the direction of the Company terminate this Deposit Agreement by giving notice of such termination to the Holders at least 30 days prior to the date fixed in such notice for such termination. The Depositary may terminate this Deposit Agreement, upon the notice set forth in the preceding sentence of this Section 6.02, at any time after 90 days after the Depositary shall have delivered to the Company its written resignation, provided that no successor depositary shall have been appointed and accepted its appointment as provided in Section 5.04 before the end of such 90 days. After the date so fixed for termination, the Depositary and its agents shall perform no further acts under this Deposit Agreement, except to advise Holders of such termination, to receive and hold distributions on Deposited Securities (or sell property or rights or convert Deposited Securities into cash as provided in this Deposit Agreement) and to deliver Deposited Securities in exchange for Receipts surrendered to the Depositary. As soon as practicable after the expiration of one year from the date so fixed for termination, the Depositary shall sell the Deposited Securities and may thereafter (so long as it may lawfully do so) hold the net proceeds of any such sale, together with any other cash then held by it hereunder, unsegregated and without liability for interest, for the pro rata benefit of the Holders of Receipts that have not theretofore been surrendered. After making such sale, the Depositary shall be discharged from all obligations in respect of the Receipts and this Deposit Agreement, except to account for such net proceeds and other cash. After the date so fixed for termination, the Company shall be discharged from all obligations under this Deposit Agreement except for its obligations to the Depositary and its agents under Sections 5.08 and 5.09. ARTICLE 7. MISCELLANEOUS SECTION 7.01. Counterparts. This Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of such counterparts shall constitute one and the same instrument. Copies of this Deposit Agreement shall be filed with the Depositary and the Custodian and shall be open to inspection by any Holder during business hours. SECTION 7.02. No Third Party Beneficiaries. This Deposit Agreement is for the exclusive benefit of the Company, the Depositary and, to the extent contemplated hereby, the Holders, and their respective successors 18 22 hereunder, and shall not give any legal or equitable right, remedy or claim whatsoever to any other person. SECTION 7.03. Severability. In case any one or more of the provisions contained in this Deposit Agreement or in the Receipts should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall in no way be affected, prejudiced or disturbed thereby. SECTION 7.04. Holders Parties: Binding Effect. The Holders and beneficial owners of Receipts from time to time shall be parties to this Deposit Agreement and shall be bound by all of the terms and conditions hereof and of the Receipts by acceptance thereof. SECTION 7.05. Notices. (a) To the Company. Any and all notices to be given to the Company shall be duly given if personally delivered or sent by mail, first class airmail postage prepaid, or by cable, telex or facsimile transmission in each case confirmed by letter, addressed to AMVESCAP PLC, Registered Office 11 Devonshire Square, London EC2M 4YR, England, Attention: Company Secretary, or any other address which the Company may specify in writing to the Depositary. (b) To the Depositary. Any and all notices to be given to the Depositary shall be duly given if personally delivered or sent by mail, first class airmail postage prepaid, or by cable, telex or facsimile transmission in each case confirmed by letter, addressed to The Bank of New York, 101 Barclay Street, 22W, New York, New York 10286, Attention: American Depositary Receipt Administration, which is the location of the Depositary's Office on the date of this Deposit Agreement, or any other address which the Depositary may specify in writing to the Company. (c) To the Holders. Any and all notices to be given to any Holder shall be duly given if personally delivered or sent by mail, first class airmail postage prepaid, or by cable, telex or facsimile transmission in each case confirmed by letter, addressed to such Holder at the address of such Holder as it appears on the transfer books for Receipts of the Depositary, or, if such Holder shall have filed with the Depositary a written request that notices intended for such Holder be mailed to some other address, at the address designated in such request. (d) General. Notice given as aforesaid, (i) to the Company or the Depositary, shall be deemed to be effected when received, and (ii) to a Holder by mail or by cable, telex or facsimile transmission, shall be deemed to be effected at the time when a duly addressed letter containing the same (or a confirmation thereof in the case of a cable, telex or facsimile transmission) is deposited, first class airmail postage prepaid, in a post-office letter box. The Depositary or the Company may act upon any cable, telex or facsimile transmission received by it from the other or from any Holder, notwithstanding that such cable, telex or facsimile transmission shall not subsequently be confirmed as aforesaid. 19 23 SECTION 7.06. Submission to Jurisdiction; Appointment of Agent for Service of Process. The Company hereby (i) irrevocably designates and appoints CT Corporation System, 1633 Broadway, New York, New York 10019, in the State of New York, as the Company's authorized agent upon which process may be served in any suit or proceeding arising out of or relating to the Shares or Deposited Securities, the American Depositary Shares, the Receipts or this Agreement, (ii) consents and submits to the jurisdiction of any state or federal court in the State of New York in which any such suit or proceeding may be instituted, and (iii) agrees that service of process upon said authorized agent shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding. The Company agrees to deliver, upon the execution and delivery of this Deposit Agreement, a written acceptance by such agent of its appointment as such agent. The Company further agrees to take any and all action, including the filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment in full force and effect for so long as any American Depositary Shares or Receipts remain outstanding or this Agreement remains in force. In the event the Company fails to continue such designation and appointment in full force and effect, the Company hereby waives personal service of process upon it and consents that any such service of process may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified for notices hereunder, and service so made shall be deemed completed five (5) days after the same shall have been so mailed. SECTION 7.07. Governing Law. This Deposit Agreement and the Receipts shall be interpreted and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by the laws of the State of New York. SECTION 7.08. Amended and Restated Receipts. The Depositary will arrange to have new Receipts printed to reflect the changes made by this amended and restated Deposit Agreement and, following the effective date hereof, shall execute and deliver, as provided in Section 2.03, 4.03 or 4.04 hereof, only such new Receipts. Notwithstanding the foregoing, any Receipts issued and outstanding prior to the effective date hereof which do not reflect the changes to the form of Receipt effected hereby need not be called in for exchange but shall be deemed to incorporate all of the terms and conditions set forth in the form of Receipt as amended hereby. SECTION 7.09. Compliance with U.S. Securities Laws. Nothwithstanding anything in this Deposit Agreement to the contrary, the Company and the Depositary each agrees that it will not exercise any rights it has under this Deposit Agreement to permit the withdrawal or delivery of Deposited Securities in a manner which would violate the U.S. securities laws, including, but not limited to Section I.A.(1) of the General Instructions of the Form F-6 Registration Statement, as amended from time to time, under the Securities Act of 1933. 20 24 IN WITNESS WHEREOF, AMVESCAP PLC and THE BANK OF NEW YORK have duly executed this Deposit Agreement as of the day and year first above set forth and all holders of assets shall become parties hereto upon acceptance by them of receipts issued in accordance with the terms hereof. AMVESCAP PLC By /s/ ROBERT F. MCCULLOUGH -------------------------------------- Name: Robert F. McCullough Title: Chief Financial Officer THE BANK OF NEW YORK By /s/ NANCY A. FITZSIMMONS -------------------------------------- Name: Nancy A. Fitzsimmons Title: Vice President 21 EX-4.11 5 h86436ex4-11.txt LETTER AMENDMENT NO. 1 TO CREDIT AGREEMENT 1 EXHIBIT 4.11 LETTER AMENDMENT Dated as of June 7, 2000 To the banks, financial institutions and other institutional lenders (collectively, the "Lenders") parties to the Credit Agreement referred to below and to Citibank, N.A., as co-syndication agent for the Lenders Ladies and Gentlemen: We refer to the Amended and Restated Credit Agreement dated as of December 17, 1997, and amendments thereto dated as of April 29, 1999 and May 29, 1998 (such Credit Agreement, as so amended, the "Credit Agreement") among the undersigned and you. Capitalized terms not otherwise defined in this Letter Amendment have the same meanings as specified in the Credit Agreement. The Borrower has proposed to acquire Trimark Financial Corporation for an approximate purchase price of CND$2.7 billion (the "Acquisition"), which may be paid in part by the issuance of up to CND$1.35 billion in principal amount of equity subordinated debentures ("ESDs"), and has proposed to amend the Credit Agreement to permit consummation of the Acquisition and to permit the issuance of the ESDs . You have indicated your willingness, on the terms and conditions stated below, to so agree. Accordingly, it is hereby agreed by you and us as follows: The Credit Agreement is, effective as of the date of this Letter Amendment, hereby amended as follows: (a) Section 5.02(b)(iii) is amended by adding to the end thereof a new subsection (K), to read as follows: "(K) Debt in an amount not to exceed CND$1,350,000,000 principal amount of equity subordinated debentures issued in connection with the acquisition of Trimark Financial Corporation." (b) Section 5.02(e) is amended by adding to the end thereof a new subsection (xv) to read a follows: "(xv) Investments made by the Borrower and its Subsidiaries in connection with the acquisition of Trimark Financial Corporation." 2 This Letter Amendment shall become effective as of the date first above written when, and only when, on or before June 16, 2000, Citibank, as Co-Syndication Agent, shall have received counterparts of this Letter Amendment executed by the undersigned and the Required Lenders or, as to any of the Lenders, advice satisfactory to Citibank, as Co-Syndication Agent, that such Lender has executed this Letter Amendment, and the consent attached hereto executed by each Guarantor. This Letter Amendment is subject to the provisions of Section 8.01 of the Credit Agreement. On and after the effectiveness of this Letter Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Letter Amendment. The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Letter Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Letter Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or any Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. If you agree to the terms and provisions hereof, please evidence such agreement by executing and returning at least two counterparts of this Letter Amendment to Susan L. Hobart, Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022. This Letter Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Letter Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Letter Amendment. This Letter Amendment shall be governed by, and construed in accordance with, the laws of the State of New York. Very truly yours, AMVESCAP PLC By /s/ ROBERT F. McCULLOUGH -------------------------------- Title: 2 3 Agreed as of the date first above written: CITIBANK, N.A., as Co-Syndication Agent and as Lender By /s/ ILLEGIBLE ----------------------------------------- Title: Vice President BANK OF AMERICA, N.A., as Co-Syndication Agent and as Lender By /s/ JOAN D'AMICO ----------------------------------------- Title: Managing Director THE CHASE MANHATTAN BANK By /s/ ----------------------------------------- Title: SUNTRUST BANK, ATLANTA By /s/ BRIAN K. PETERS ----------------------------------------- Title: Managing Director By /s/ SUSAN R. CARROLL ----------------------------------------- Title: Banking Officer WACHOVIA BANK, N.A. f/k/a WACHOVIA BANK OF GEORGIA, N.A. By /s/ ILLEGIBLE ----------------------------------------- Title: Senior Vice President THE BANK OF NEW YORK By /s/ ILLEGIBLE ----------------------------------------- Title: Vice President FLEET NATIONAL BANK By /s/ ILLEGIBLE ----------------------------------------- Title: Director MELLON BANK, N.A. By /s/ JOHN R. COOPER ----------------------------------------- Title: Vice President 3 4 CIBC INC. By ----------------------------------- Title: DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCH By /s/ GEORGE-ANN TOBIN ----------------------------------- Title: Managing Director By /s/ JULIA NAND ----------------------------------- Title: Vice President NATIONAL WESTMINSTER BANK PLC By ----------------------------------- Title: THE ROYAL BANK OF SCOTLAND By /s/ ILLEGIBLE ----------------------------------- Title: EVP The Americas STATE STREET BANK AND TRUST COMPANY By ----------------------------------- Title: CREDIT LYONNAIS NEW YORK BRANCH By /s/ SEBASTIAN ROCCO ----------------------------------- Title: Senior Vice President HSBC BANK PLC By ----------------------------------- Title: UNION BANK OF CALIFORNIA, N.A. By ----------------------------------- Title: BNP PARIBAS By /s/ LAURENT VANDERZYPPE /s/ MARGUERITE L. LEBON ----------------------------------- ----------------------------------- Title: Vice President Assistant Vice President 4 5 CONSENT Dated as of June 16, 2000 The undersigned, each a Guarantor under the Guaranty dated February 13, 1997 (the "Guaranty") in favor of the Lenders parties to the Credit Agreement referred to in the foregoing Letter Amendment, hereby consents to such Letter Amendment and hereby confirms and agrees that notwithstanding the effectiveness of such Letter Amendment, the Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of such Letter Amendment, each reference in the Guaranty to the "Credit Agreement", "thereunder", "thereof" or words of like import shall mean and be a reference to the Credit Agreement, as amended by such Letter Amendment. INVESCO, INC. By /s/ ILLEGIBLE ------------------------------------- Title: INVESCO NORTH AMERICAN HOLDINGS, INC. By /s/ ILLEGIBLE ------------------------------------- Title: A I M MANAGEMENT GROUP, INC. By /s/ ROBERT H. GRAHAM ------------------------------------- Title: President A I M ADVISORS, INC. By /s/ DAWN M. HAWLEY ------------------------------------- Title: Sr. Vice President 5 EX-4.12 6 h86436ex4-12.txt LETTER AMENDMENT NO. 2 TO CREDIT AGREEMENT 1 EXHIBIT 4.12 LETTER AMENDMENT Dated as of October 19, 2000 To the banks, financial institutions and other institutional lenders (collectively, the "Lenders") parties to the Credit Agreement referred to below and to Citibank, N.A., as co-syndication agent for the Lenders Ladies and Gentlemen: We refer to the Amended and Restated Credit Agreement dated as of December 17, 1997 and amendments thereto dated as of April 29, 1998, May 29, 1998 and June 7, 2000 (such Credit Agreement, as so amended, the "Credit Agreement") among the undersigned and you. Capitalized terms not otherwise defined in this Letter Amendment have the same meanings as specified in the Credit Agreement. The Borrower has proposed to acquire Perpetual plc for an approximate purchase price of 1.05 billion pounds sterling (the "Acquisition"), which may be paid in part by the issuance of up to 300,000,000 pounds sterling in principal amount of notes, and has proposed to amend the Credit Agreement to permit consummation of the Acquisition and to permit the issuance of such notes. You have indicated your willingness, on the terms and conditions stated below, to so agree. Accordingly, it is hereby agreed by you and us as follows: The Credit Agreement is, effective as of the date of this Letter Amendment, hereby amended as follows: (a) Section 5.02(b)(iii) is amended by adding to the end thereof a new subsection (L), to read as follows: "(L) Debt in an amount not to exceed 300,000,000 pounds sterling principal amount of notes issued in connection with the acquisition of Perpetual plc." (b) Section 5.02(e) is amended by adding to the end thereof a new subsection (xvi) to read as follows: "(xvi) Investments made by the Borrower and its Subsidiaries in connection wit the acquisition of Perpetual plc." This Letter Amendment shall become effective as of the date first above written when, and only when, on or before October 27, 2000, Citibank, as Co-Syndication Agent, shall have received counterparts of this Letter Amendment executed by the undersigned and 2 the Required Lenders or, as to any of the Lenders, advice satisfactory to Citibank, as Co-Syndication Agent, that such Lender has executed this Letter Amendment, and the consent attached hereto executed by each Guarantor. This Letter Amendment is subject to the provisions of Section 8.01 of the Credit Agreement. On and after the effectiveness of this Letter Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Letter Amendment. The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Letter Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Letter Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or any Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. If you agree to the terms and provisions hereof, please evidence such agreement by executing and returning at least two counterparts of this Letter Amendment to Susan L. Hobart, Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022. This Letter Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Letter Amendment by telecopier shall be effective as delivery of a manually executed counterpart of the Letter Amendment. This Letter Amendment shall be governed by, and construed in accordance with the laws of the State of New York. Very truly yours, AMVESCAP PLC By /s/ [ILLEGIBLE] -------------------------------------- Title: 3 Agreed as of the date first above written: CITIBANK, N.A., as Co-Syndication Agent and as Lender By /s/ ALEXANDER DUKA -------------------------------------------------- Title: Vice President BANK OF AMERICA, N.A., as Co-Syndication Agent and as Lender By /s/ JOAN L. D'AMICO -------------------------------------------------- Title: Managing Director THE CHASE MANHATTAN BANK By /s/ ELIZABETH H. SCHUZLE -------------------------------------------------- Title: Managing Director SUNTRUST BANK, ATLANTA By /s/ SUSAN R. CARROLL -------------------------------------------------- Title: AVP By /s/ [ILLIGIBLE] -------------------------------------------------- Title: Director WACHOVIA BANK, N.A. F/N/A WACHOVIA BANK OF GEORGIA, N.A. By /s/ KAREN H. MCCLAIN -------------------------------------------------- Title: Senior Vice President THE BANK OF NEW YORK By /s/ TIMOTHY J. SOMERS -------------------------------------------------- Title: Vice President FLEET NATIONAL BANK By /s/ [ILLEGIBLE] -------------------------------------------------- Title: Director MELLON BANK, N.A. By /s/ JOHN R. COOPER -------------------------------------------------- Title: Vice President 4 CIBC INC. By /s/ ROBERT MENDELES -------------------------------------------------- Title: Executive Director DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCH By /s/ ALAN KROUK -------------------------------------------------- Title: Vice President By /s/ CLINTON M. JOHNSON -------------------------------------------------- Title: Managing Director NATIONAL WESTMINSTER BANK PLC By /s/ [ILLEGIBLE] -------------------------------------------------- Title: Relationship Manager THE ROYAL BANK OF SCOTLAND By /s/ [ILLEGIBLE] -------------------------------------------------- Title: Relationship Manager STATE STREET BANK AND TRUST COMPANY By /s/ STEVEN G. CARON -------------------------------------------------- Title: Vice President CREDIT LYONNAIS NEW YORK BRANCH By /s/ SEBASTIAN ROCCO -------------------------------------------------- Title: Senior Vice President HSBC BANK PLC By /s/ [ILLEGIBLE] -------------------------------------------------- Title: Relationship Manager UNION BANK OF CALIFORNIA, N.A. By -------------------------------------------------- Title: BNP PARIBAS By /s/ [ILLEGIBLE] -------------------------------------------------- Title: Vice President 5 CONSENT Dated as of October 19, 2000 The undersigned, each a Guarantor under the Guaranty dated February 13, 1997 (the "Guaranty") in favor of the Lenders parties to the Credit Agreement referred to in the foregoing Letter Amendment, hereby consents to such Letter Amendment and hereby confirms and agrees that notwithstanding the effectiveness of such Letter Amendment, the Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of such Letter Amendment, each reference in the Guaranty to the "Credit Agreement", "thereunder", "thereof" or words of like import shall mean and be a reference to the Credit Agreement, as amended by such Letter Amendment. INVESCO, INC. By /s/ [ILLEGIBLE] ------------------------------------- Title: Chief Executive Officer INVESCO NORTH AMERICAN HOLDINGS, INC. By /s/ [ILLEGIBLE] ------------------------------------- Title: Secretary and General [ILLEGIBLE] A I M MANAGEMENT GROUP, INC. By /s/ ROBERT H. GRAHAM ------------------------------------- Title: Chief Executive Officer & President A I M ADVISORS, INC. By /s/ ROBERT H. GRAHAM ------------------------------------- Title: President EX-4.13 7 h86436ex4-13.txt LETTER AMENDMENT NO. 3 TO CREDIT AGREEMENT 1 EXHIBIT 4.13 LETTER AMENDMENT Dated as of March 13, 2001 To the banks, financial institutions and other institutional lenders (collectively, the "Lenders") parties to the Credit Agreement referred to below and to Citibank, N.A., as co-syndication agent for the Lenders Ladies and Gentlemen: We refer to the Amended and Restated Credit Agreement dated as of December 17, 1997 and amendments thereto dated as of April 29, 1998, May 29 , 1998, June 7, 2000 and October 19, 2000 (such Credit Agreement, as so amended, the "Credit Agreement") among the undersigned and you. Capitalized terms not otherwise defined in this Letter Amendment have the same meanings as specified in the Credit Agreement. The Borrower has proposed to acquire National Asset Management Company for an upfront payment of $200,000,000 and additional contingent earn out payments of up to $75,000,000 and retention payments payable over five years totaling $25,000,000 (the "Acquisition"), and has proposed to amend the Credit Agreement to permit consummation of the Acquisition. You have indicated your willingness, on the terms and conditions stated below, to so agree. Accordingly, it is hereby agreed by you and us as follows: The Credit Agreement is, effective as of the date of this Letter Amendment, hereby amended as follows: (a) Section 5.02(e) is amended by adding to the end thereof a new subsection (xvii) to read as follows: "(xvii) Investments made by the Borrower and its Subsidiaries in connection with the acquisition of National Asset Management Company." This Letter Amendment shall become effective as of the date first above written when, and only when, on or before March 26, 2001, Citibank, as Co-Syndication Agent, shall have received counterparts of this Letter Amendment executed by the undersigned and the Required Lenders or, as to any of the Lenders, advice satisfactory to Citibank, as Co-Syndication Agent, that such Lender has executed this Letter Amendment, and the consent attached hereto executed by each Guarantor. This Letter Amendment is subject to the provisions of Section 8.01 of the Credit Agreement. On and after the effectiveness of this Letter Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to 2 "the Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Letter Amendment. The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Letter Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Letter Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or any Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. If you agree to the terms and provisions hereof, please evidence such agreement by executing and returning at least two counterparts of this Letter Amendment to Susan L. Hobart, Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022. This Letter Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Letter Amendment by telecopier shall be effective as delivery of a manually executed counterpart of the Letter Amendment. This Letter Amendment shall be governed by, and construed in accordance with the laws of the State of New York. Very truly yours, AMVESCAP PLC By /s/ [ILLEGIBLE] ------------------------------------- Title: Treasurer 2 3 Agreed as of the date first above written: CITIBANK, N.A., as Co-Syndication Agent and as Lender By /s/ ALEXANDER DUKA -------------------------------------------------- Title: Vice President BANK OF AMERICA, N.A., as Co-Syndication Agent and as Lender By /s/ JOAN L. D'AMICO -------------------------------------------------- Title: Managing Director THE CHASE MANHATTAN BANK By /s/ ELIZABETH SCHUZLE -------------------------------------------------- Title: Managing Director SUNTRUST BANK, ATLANTA By /s/ DANIEL S. KOMITOR -------------------------------------------------- Title: Director By /s/ BRANDON GALL -------------------------------------------------- Title: Associate WACHOVIA BANK OF GEORGIA, N.A. By /s/ [ILLEGIBLE] -------------------------------------------------- Title: Senior Vice President THE BANK OF NEW YORK By /s/ [ILLEGIBLE] -------------------------------------------------- Title: Vice President FLEET NATIONAL BANK By /s/ [ILLEGIBLE] -------------------------------------------------- Title: Director MELLON BANK, N.A. By /s/ JOHN R. COOPER -------------------------------------------------- Title: Vice President 3 4 CIBC INC. By /s/ ROBERT MENDELES -------------------------------------------------- Title: Executive Director DEUTSCHE BANK AG, NEW YORK BRANCH By /s/ ALAN KROUK -------------------------------------------------- Title: Vice President By /s/ CLINTON M. JOHNSON -------------------------------------------------- Title: Managing Director NATIONAL WESTMINSTER BANK PLC By /s/ [ILLEGIBLE] -------------------------------------------------- Title: Senior Relationship Manager THE ROYAL BANK OF SCOTLAND By /s/ [ILLEGIBLE] -------------------------------------------------- Title: Senior Relationship Manager STATE STREET BANK AND TRUST COMPANY By /s/ STEVEN G. CARON -------------------------------------------------- Title: Vice President CREDIT LYONNAIS NEW YORK BRANCH By /s/ [ILLEGIBLE] -------------------------------------------------- Title: Vice President HSBC BANK PLC By /s/ [ILLEGIBLE] -------------------------------------------------- Title: [ILLEGIBLE] UNION BANK OF CALIFORNIA, N.A. By -------------------------------------------------- Title: BNP PARIBAS By /s/ WILLIAM SHAHEEN -------------------------------------------------- Title: Director By /s/ LAURENT VANDERZYPPE -------------------------------------------------- Title: Vice President 4 5 CONSENT Dated as of March 13, 2001 The undersigned, each a Guarantor under the Guaranty dated February 13, 1997 (the "Guaranty") in favor of the Lenders parties to the Credit Agreement referred to in the foregoing Letter Amendment, hereby consents to such Letter Amendment and hereby confirms and agrees that notwithstanding the effectiveness of such Letter Amendment, the Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of such Letter Amendment, each reference in the Guaranty to the "Credit Agreement", "thereunder", "thereof" or words of like import shall mean and be a reference to the Credit Agreement, as amended by such Letter Amendment. INVESCO, INC. By /s/ [ILLEGIBLE] ------------------------------------- Title: Chief Financial Officer INVESCO NORTH AMERICAN HOLDINGS, INC. By /s/ [ILLEGIBLE] ------------------------------------- Title: Assistant Secretary A I M MANAGEMENT GROUP, INC. By /s/ DAWN M. HAWLEY ------------------------------------- Title: Senior Vice President & Chief Financial Officer A I M ADVISORS, INC. By /s/ DAWN M. HAWLEY ------------------------------------- Title: Senior Vice President & Treasurer 5 EX-4.16 8 h86436ex4-16.txt GUARANTY FROM INVESCO, INC. 1 EXECUTION COPY EXHIBIT 4.16 GUARANTY Dated February 13, 1997 From INVESCO, INC., INVESCO NORTH AMERICAN HOLDINGS, INC. and INVESCO CAPITAL MANAGEMENT, INC. as Guarantors in favor of THE LENDERS REFERRED TO IN THE CREDIT AGREEMENT REFERRED TO HEREIN 2 TABLE OF CONTENTS
SECTION PAGE 1. Guaranty; Limitation of Liability ......................................... 1 2. Guaranty Absolute ......................................................... 2 3. Waivers and Acknowledgments ............................................... 3 4. Subrogation ............................................................... 3 5. Payments Free and Clear of Taxes, Etc ..................................... 4 6. Representations and Warranties ............................................ 5 7. Amendments, Etc. .......................................................... 5 8. Notices, Etc. ............................................................. 5 9. No Waiver; Remedies ....................................................... 6 10. Right of Set-off ......................................................... 6 11. Indemnification .......................................................... 6 12. Continuing Guaranty; Assignments under the Credit Agreement .............. 6 13. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. .................. 7
3 GUARANTY GUARANTY dated February 13, 1997 made by INVESCO, Inc., a Delaware corporation, INVESCO North American Holdings, Inc., a Delaware corporation, and INVESCO Capital Management, Inc., a Delaware corporation (collectively, the "Guarantors"), in favor of the Lenders (as defined in the Credit Agreement referred to below). PRELIMINARY STATEMENT. The Lenders, Citibank, N.A. and NationsBank, N.A., as Managing Agents, and NationsBank, N.A., as Funding Agent (the Managing Agents and the Funding Agent are collectively, the "Agents") are parties to a Credit Agreement dated as of February 13, 1997 (said Agreement, as it may hereafter be amended, supplemented or otherwise modified from time to time, being the "Credit Agreement", the terms defined therein are used herein as therein defined) with INVESCO PLC, a company organized under the laws of England (the "Borrower"). Each Guarantor may receive a portion of the proceeds of the Advances under the Credit Agreement and will derive substantial direct and indirect benefit from the transactions contemplated by the Credit Agreement. It is a condition precedent to the making of Advances by the Lenders under the Credit Agreement that the Guarantors shall have executed and delivered this Guaranty. NOW, THEREFORE, in consideration of the premises and in order to induce the Lenders to make Advances under the Credit Agreement from time to time, each of the Guarantors hereby agrees as follows: Section 1. Guaranty; Limitation of Liability. (a) Each Guarantor hereby unconditionally and irrevocably guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all obligations of each other Loan Party now or hereafter existing under the Loan Documents, whether for principal, interest, fees, expenses or otherwise (such obligations being the "Guaranteed Obligations"), and agrees to pay any and all expenses (including reasonable counsel fees and expenses) incurred by any Agent or any Lender in enforcing any rights under this Guaranty. Without limiting the generality of the foregoing, each Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by a Loan Party to the Agents or the Lenders under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such Loan Party. (b) The liability of each Guarantor under this Guaranty shall not exceed the greater of (i) the net benefit realized by such Guarantor from the proceeds of the Advances made from time to time by the Borrower to such Guarantor or any Subsidiary of such Guarantor and (ii) the greater of (x) 95% of the Adjusted Net Assets of such Guarantor on the date of delivery hereof and (y) 95% of the Adjusted Net Assets of such Guarantor on the date of any payment hereunder. "Adjusted Net Assets" of any Guarantor at any date means the lesser of (x) the amount by which the fair value of the property of such Guarantor exceeds the total amount of liabilities, including, without limitation, contingent liabilities, but excluding liabilities under this Guaranty, of such Guarantor at such date and (y) the amount by which the present fair salable 4 value of the assets of such Guarantor at such date exceeds the amount that will be required to pay the probable liability of such Guarantor on its debts, excluding debt in respect of this Guaranty, as they become absolute and matured. Section 2. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Agent or any Lender with respect thereto. The obligations of each Guarantor under this Guaranty are independent of the Guaranteed Obligations or any other obligations of any other Loan Party under the Loan Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any other Loan Party or whether the Borrower or any other Loan Party is joined in any such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following: (a) any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other obligations of any other Loan Party under the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Borrower or any of its Subsidiaries or otherwise; (c) any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations; (d) any manner of application of collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral for all or any of the Guaranteed Obligations or any other obligations of any other Loan Party under the Loan Documents or any other assets of the Borrower or any of its Subsidiaries; (e) any change, restructuring or termination of the corporate structure or existence of the Borrower or any of its Subsidiaries or of AIM or any of its Subsidiaries; (f) any failure of any Lender to disclose to the Borrower or any of the Guarantors any information relating to the financial condition, operations, properties or prospects of any other Loan Party now or in the future known to any Lender (each Guarantor waiving any duty on the part of the Lenders to disclose such information); or (g) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by any Agent or any 5 Lender that might otherwise constitute a defense available to, or a discharge of, the Borrower, any Guarantor or any other guarantor or surety. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Lender or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party or otherwise, all as though such payment had not been made. Section 3. Waivers and Acknowledgments. (a) Each Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Agents or any other Lender protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against the Borrower or any other Person or any collateral. (b) Each Guarantor hereby waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. (c) Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in this Section 3 are knowingly made in contemplation of such benefits. Section 4. Subrogation. Each Guarantor will not exercise any rights that it may now or hereafter acquire against the Borrower or any other insider guarantor that arise from the existence, payment, performance or enforcement of such Guarantor's obligations under this Guaranty or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Agent or any Lender against any Loan Party or any other insider guarantor or any collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Loan Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the obligations and all other amounts payable under this Guaranty shall have been paid in full in cash and the Commitments shall have expired or terminated. If any amount shall be paid to any such Guarantor in violation of the preceding sentence at any time prior to the later of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and the Termination Date, such amount shall be held in trust for the benefit of the Agents and the Lenders and shall forthwith be paid to the Funding Agent to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) any Guarantor shall make payment to any Agent or any other Lender of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall be paid in full in cash and (iii) the Termination Date shall have occurred, the Agents and the Lenders will, at such 6 Guarantor's request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor. Section 5. Payments Free and Clear of Taxes, Etc. (a) Except as otherwise required by law, any and all payments by any Guarantor hereunder shall be made, in accordance with Section 2.13 of the Credit Agreement, free and clear of and without deduction for any and all Indemnifiable Taxes. If any Guarantor shall be required by law to deduct any Indemnifiable Taxes from or in respect of any sum payable hereunder to any Lender or any Agent or, if any Agent shall be required by law to deduct any Indemnifiable Taxes from or in respect of any sum paid or payable hereunder to any Lender, (i) the sum payable shall be increased as may be necessary so that after making all required deductions for Indemnifiable Taxes (including deductions, whether by such Guarantor or any Agent, applicable to additional sums payable under this Section) such Lender or such Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Guarantor (or, as the case may be and as required by applicable law, any Agent) shall make such deductions and (iii) such Guarantor (or, as the case may be and as required by applicable law, any Agent) shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, each Guarantor shall pay any present or future Other Taxes. (c) Each Guarantor shall indemnify each Lender and each Agent for the full amount of Indemnifiable Taxes or Other Taxes imposed on or paid by such Lender or such Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender or such agent (as the case may be) makes written demand therefor. (d) The obligations of each Guarantor under this Section are subject in all respects to the limitations, qualifications and satisfaction of conditions set forth in Section 2.14 of the Credit Agreement. Without limitation of the foregoing, the Lenders are subject to the obligations set forth in Section 2.14 of the Credit Agreement to the same extent as if set forth herein. Section 6. Representations and Warranties. Each Guarantor hereby represents and warrants as follows: (a) There are no conditions precedent to the effectiveness of this Guaranty that have not been satisfied or waived. (b) Each Guarantor has, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Guaranty, and such Guarantor has established adequate means of obtaining from any other Loan Parties on a continuing basis 7 information pertaining to, and is now and on a continuing basis will be completely familiar with, the financial condition, operations, properties and prospects of such other Loan Parties. Section 7. Amendments, Etc. (a) Except as provided in subsection (b) to this Section 9, no amendment or waiver of any provision of this Guaranty and no consent to any departure by the Guarantors therefrom shall in any event be effective unless the same shall be in writing and signed by the Agents and the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders, (1) limit the liability of any of the Guarantors hereunder, (2) postpone any date fixed for payment hereunder or (3) change the number of Lenders required to take any action hereunder. (b) Upon the execution and delivery by any Person of an assumption of guaranty in substantially the form of Exhibit 1 hereto (each, an "Assumption of Guaranty"), such Person shall be and become a Guarantor hereunder and each reference in this Guaranty to "Guarantors" shall also mean and be a reference to such Additional Guarantor. Section 8. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopy or telex communication) and mailed, telegraphed, telecopied, telexed or delivered to it, if to any Guarantor, addressed to it at the address of INVESCO PLC specified in the Credit Agreement, if to any Agent or any Lender, at their addresses specified in the Credit Agreement, or as to any party at such other address as shall be designated by such party in a written notice to each other party. All such notices and other communications shall, when mailed, telegraphed, telecopied or telexed, be effective when deposited in the mails, delivered to the telegraph company, transmitted by telecopier or confirmed by telex answerback, respectively. Section 9. No Waiver; Remedies. No failure on the part of any Agent or any Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 10. Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such Affiliate to or for the credit or the account of the Guarantors against any and all of the obligations of the Guarantors now or hereafter existing under this Guaranty, whether or not such Lender shall have made any demand under this Guaranty and although such obligations may be unmatured. Each Lender agrees promptly to notify the Guarantors after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender and 8 its respective Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender and its respective Affiliates may have. Section 11. Indemnification. Without limitation on any other obligations of the Guarantors or remedies of the Lenders under this Guaranty, each Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless each Lender from and against, and shall pay on demand, any and all losses, liabilities, damages, costs, expenses and charges (including the fees and disbursements of such Lender's legal counsel) suffered or incurred by such Lender as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms. Section 12. Continuing Guaranty; Assignments under the Credit Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the later of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and the Termination Date, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Agents and the Lenders and their successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitment, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, in each case as and to the extent provided in Section 8.07 of the Credit Agreement. Section 13. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a) This Guaranty shall be governed by, and construed in accordance with, the laws of the State of New York. (b) Each Guarantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party, or for recognition or enforcement of any judgment, and each Guarantor hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Guaranty shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party in the courts of any jurisdiction. (c) Each Guarantor irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the 9 laying of venue of any suit, action or proceeding arising out of or relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party in any New York State or federal court. Each Guarantor hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d) Each Guarantor hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the transactions contemplated thereby or the actions of any Agent or any Lender in the negotiation, administration, performance or enforcement thereof. IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. INVESCO, INC. By ------------------------------------- Name: Title: INVESCO NORTH AMERICAN HOLDINGS, INC. By ------------------------------------- Name: Title: INVESCO CAPITAL MANAGEMENT, INC. By ------------------------------------- Name: Title: 10 EXHIBIT 1 - ASSUMPTION OF GUARANTY ASSUMPTION OF GUARANTY __________ , 199_ Citibank, N.A., and NationsBank, N.A. as Managing Agents to the Credit Agreement Credit Agreement dated as of February 13, 1997 (as amended or otherwise modified from time to time, the "Credit Agreement") among INVESCO PLC, a company organized under the laws of England (the "Borrower"), the lenders and the co-agents listed on the signature pages thereof, Citibank, N.A. and NationsBank, N.A., as managing agents, and NationsBank, N.A., as funding agent. Ladies and Gentlemen: Reference is made to the above-captioned Credit Agreement and to the Guaranty referred to therein (such Guaranty, as in effect on the date hereof and as it may hereafter be amended, modified or supplemented from time to time, being the "Guaranty"). The terms defined in the Guaranty and not otherwise defined herein are used herein as therein defined. The undersigned hereby unconditionally guarantees the punctual payment when due, whether at stated maturity by acceleration or otherwise, of all of the Guaranteed Obligations and agrees to pay any and all expenses (including reasonable counsel fees and expenses) incurred by the Agents or the Lenders, on the terms and subject to the limitations set forth in the Guaranty as if it were an original party thereto. On and after the date hereof, each reference in the Guaranty to "Guarantor" shall mean and be a reference to the undersigned. The undersigned hereby agrees to be bound as a Guarantor by all of the terms and provisions of the Guaranty to the same extent as each other Guarantor and hereby represents and warrants as follows: (a) The undersigned (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be 11 licensed except where the failure to so qualify or be licensed is not reasonably likely to have a Material Adverse Effect and (iii) has all requisite corporate power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. (b) The execution, delivery and performance by the undersigned of this Assumption of Guaranty and each other Loan Document to which the undersigned is or is to be a party and the performance by the undersigned of its obligations under the Guaranty, as amended and supplemented by this Assumption of Guaranty, and each such other Loan Document are within the corporate powers of the undersigned, have been duly authorized by all necessary corporate action, and do not (i) contravene the undersigned's charter or bylaws, (ii) violate any law (including, without limitation, the Securities Exchange Act of 1934), rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default under, any contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument binding on or affecting the undersigned, any of its Subsidiaries or any of their properties or (iv) result in or require the creation or imposition of any Lien upon or with respect to any of the properties of the undersigned or any of its Subsidiaries. Neither the undersigned nor any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, the violation or breach of which is reasonably likely to have a Material Adverse Effect. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the due execution, delivery, recordation, filing or performance by the undersigned of this Assumption of Guaranty or any other Loan Document to which the undersigned is or is to be a party, or for the performance by the undersigned of the Guaranty, as amended and supplemented by this Assumption of Guaranty, and each such other Loan Document or (ii) the exercise by the Agents or any Lender of its rights under the Guaranty, as amended and supplemented by this Assumption of Guaranty, except for the authorizations, approvals, actions, notices and filings listed on Schedule 1 hereto, all of which have been duly obtained, taken, given or made and are in full force and effect. (d) This Assumption of Guaranty has been, and each other Loan Document to which the undersigned is or is to be a party when delivered pursuant to the Credit Agreement will have been, duly executed and delivered by the undersigned. This Assumption of Guaranty and the Guaranty as amended and supplemented hereby are, and each other Loan Document to which the undersigned is or is to be a party when delivered pursuant to the Credit Agreement will be, the legal, valid and binding obligations of the undersigned, enforceable against the undersigned in accordance with its terms. 12 THIS ASSUMPTION OF GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. Very truly yours, [NAME OF ADDITIONAL GUARANTOR] By ------------------------------------- Name: Title: EX-4.17 9 h86436ex4-17.txt 2ND AMENDED PURCHASE AND SALE AGREEMENT 1 EXHIBIT 4.17 ================================================================================ SECOND AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT among A I M MANAGEMENT GROUP INC., as Seller A I M DISTRIBUTORS, INC., as Distributor A I M ADVISORS, INC., as Advisor CITIBANK, N.A., as Purchaser and CITICORP NORTH AMERICA, INC., as Program Agent Dated as of December 14, 2000 ================================================================================ 2 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION SECTION 1.01. Definitions..............................................................................1 SECTION 1.02. Rules of Construction....................................................................1 ARTICLE II PURCHASE AND SALE OF RECEIVABLES; ADDITIONAL FUNDS SECTION 2.01. Purchase of Receivables..................................................................2 SECTION 2.02. Purchase Notices and Funding Notices.....................................................2 SECTION 2.03. Additional Funds and Companies...........................................................2 ARTICLE III CONDITIONS PRECEDENT SECTION 3.01. Conditions Precedent to Effectiveness....................................................4 SECTION 3.02. Conditions Precedent to the Purchaser's Obligation to Purchase Receivables.......................................................................5 ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Seller, the Distributor and the Advisor...................................................6 SECTION 4.02 Additional Representations and Warranties of the Seller...................................11 SECTION 4.03 Additional Representations and Warranties of the Distributor..............................13 ARTICLE V COVENANTS SECTION 5.01. Affirmative Covenants of the Seller, the Distributor and the Advisor.......................................................12 SECTION 5.02. Negative Covenants of the Seller, the Distributor and the Advisor.......................................................16 SECTION 5.03 Additional Covenants of the Seller........................................................21 SECTION 5.04 Additional Covenants of the Distributor...................................................22
i 3 ARTICLE VI EVENTS OF TERMINATION SECTION 6.01. Events of Termination....................................................................21 ARTICLE VII THE PROGRAM AGENT SECTION 7.01. Authorization and Action.................................................................25 SECTION 7.02. Program agent's Reliance, Etc............................................................25 SECTION 7.03. Indemnification..........................................................................25 SECTION 7.04. Rights of the Program Agent..............................................................26 ARTICLE VIII SECTION 8.01. Undertakings; Payment of Damages.........................................................26 SECTION 8.02. Agreement Not Affected...................................................................26 SECTION 8.03. Waiver of Notice; No Offset; No Subrogation..............................................27 ARTICLE IX MISCELLANEOUS SECTION 9.01. No Waiver; Modifications in Writing......................................................27 SECTION 9.02. Payment..................................................................................27 SECTION 9.03. Notices, etc.............................................................................28 SECTION 9.04. Costs and Expenses; Indemnification......................................................30 SECTION 9.05. Taxes....................................................................................33 SECTION 9.06. Execution in Counterparts................................................................36 SECTION 9.07. Binding Effect; Assignment...............................................................36 SECTION 9.08. Governing Law; Submission to Jurisdiction................................................36 SECTION 9.09. Severability of Provisions...............................................................37 SECTION 9.10. Confidentiality..........................................................................37 SECTION 9.11. Intent of Agreement......................................................................37 SECTION 9.12. Liability to Any Company.................................................................37
ii 4 SECTION 9.13. Merger...................................................................................38 SECTION 9.14. Further acts.............................................................................38 SECTION 9.15. Assignee Rights; Etc.....................................................................38 SECTION 9.16. Specific Performance; Other Rights and Remedies..........................................39
SCHEDULES SCHEDULE I Form of Purchaser Report SCHEDULE II List of Funds, List of Companies and Shares SCHEDULE III CDSCs SCHEDULE IV List of Fundamental Investment Objectives SCHEDULE V Form of Legend SCHEDULE VI Conditions For a Permitted Change in Control EXHIBITS EXHIBIT A-1 Form of Purchase Notice EXHIBIT A-2 Form of Funding Notice EXHIBIT B-1 Form of Distributor's Certificate EXHIBIT B-2 Form of Seller's Certificate EXHIBIT B-3 Form of Advisor's Certificate EXHIBIT C Form of Irrevocable Payment Instruction EXHIBIT D Form of Additional Eligible Fund Addendum EXHIBIT E Allocation Procedures EXHIBIT F Form of Take-out Notice APPENDIX A Definition List iii 5 SECOND AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT SECOND AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT dated as of December 14, 2000 (as amended and supplemented, this "Agreement") among CITIBANK, N.A. (together with its successors and assigns, the "Purchaser"), CITICORP NORTH AMERICA, INC., as agent for the Purchaser (together with its permitted successors and assigns, the "Program Agent"), A I M MANAGEMENT GROUP INC. (together with its permitted successors and assigns, the "Seller"), A I M DISTRIBUTORS, INC. (together with its permitted successors and assigns, the "Distributor") and A I M ADVISORS, INC. (together with its permitted successors and assigns, the "Advisor"). WITNESSETH WHEREAS, the Seller and the Distributor are parties to the Transfer Agreement (as defined in Appendix A hereto) pursuant to which from time to time the Distributor shall sell and the Seller shall purchase certain distribution fee receivables in accordance with the terms thereof; WHEREAS, the Seller, the Purchaser and the Program Agent previously entered into that certain Amended and Restated Purchase and Sale Agreement dated as of December 22, 1997 (as amended and supplemented prior to the date hereof, the "Existing Purchase Agreement"); and WHEREAS, the parties hereto desire that the Existing Purchase Agreement, the Distributor Undertaking and the Advisor Undertaking (as such terms are defined in the Existing Purchase Agreement) be combined, amended and restated as set forth herein; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section 1.01. Definitions. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Definitions List attached hereto as Appendix A. Section 1.02. Rules of Construction. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires (a) each use in this Agreement of a singular version of a pronoun shall be deemed to include references to the plural, and vice versa, (b) Article and Section headings are for convenience of reference only and shall not affect the construction of this Agreement, and (c) references to "this section" or words of similar import shall be deemed to 6 refer to the entire section and not to a particular subsection, and references to "hereunder", "herein" or words of similar import shall be deemed to refer to this entire Agreement and not to the particular section or subsection. ARTICLE II PURCHASE AND SALE OF RECEIVABLES; ADDITIONAL FUNDS Section 2.01. Purchase of Receivables. On each Purchase Date and subject to and upon the terms and conditions set forth in this Agreement, the Seller shall sell, transfer, convey and assign to the Purchaser on and as of such Purchase Date, all of the Seller's right, title and interest in, to and under the Receivables and the Collections and Ancillary Rights in respect thereof relating to the sales of Shares (other than Excluded Shares) of each Fund for the Purchase Period to which such Purchase Date relates, and the Purchaser shall purchase from the Seller such Receivables and Ancillary Rights in respect thereof and Collections for an amount equal to the aggregate Purchase Prices payable in respect of such Receivables. The Purchase Prices to be paid by the Purchaser on each Purchase Date shall be paid in immediately available funds by wire transfer to the Seller's Account. Notwithstanding anything in this Agreement to the contrary, the Purchaser shall not purchase on any Purchase Date and the Seller shall not sell to the Purchaser any Receivables relating to any Excluded Shares. Section 2.02. Purchase Notices and Funding Notices. With respect to the Receivables to be purchased on any Purchase Date, the Seller shall transmit or shall cause to be transmitted to the Program Agent (with a copy to the Collection Agent), not later than 10:00 a.m. (New York City time) on such proposed Purchase Date, by facsimile transmission a Purchase Notice. The Seller agrees that it shall deliver from time to time prior to the Termination Date, but no less frequently than once each calendar month, a Purchase Notice, sufficient to initiate the sale of the Receivables for the period from the immediately preceding Sale Cutoff Date to the Sale Cutoff Date specified in such Purchase Notice, which Sale Cutoff Date shall not be more than five (5) Business Days prior to the proposed Purchase Date. The Seller shall provide the Program Agent (with a copy to the Collection Agent) with a Funding Notice for each Funding Period for which it is reasonably anticipated that the Funding Amount for such Funding Period will not be sufficient to cover the maximum aggregate Purchase Prices of Receivables to be purchased by the Purchaser during such Funding Period, which Funding Notice shall specify the amount of such deficiency and shall be delivered to the Program Agent three (3) Business Days prior to such Funding Period. The Purchaser shall by wire transfer remit the amount of any such deficiency specified in a Funding Notice to the Purchaser's Funding Account. Section 2.03. Additional Funds and Companies. Unless an Event of Termination (or an event which, with the passage of time or notice, or both, would constitute an Event of Termination) shall have occurred and be continuing, the Seller may request that on the applicable Addition Effective Date an Additional Eligible Fund become a "Fund" under this Agreement and if such Additional Eligible Fund is not 2 7 a series of an existing "Company" under this Agreement the Seller may request that the investment company of which such Additional Fund is a series becomes a "Company" under this Agreement; provided, that such additional investment company (the "Additional Company") is registered with the SEC under the Investment Company Act. On and as of such Addition Effective Date, (i) each Additional Eligible Fund and Additional Company shall become a Fund and a Company, respectively, hereunder, (ii) the Servicing Agreement shall be deemed to be supplemented to reflect such addition, (iii) Schedules II and IV hereto shall be deemed to be supplemented to add the applicable information relating to such Fund set forth in the Additional Eligible Fund Addendum relating to such Additional Eligible Fund and (iv) any reference in this Agreement to any change or modification since the date of this Agreement to the underwriting agreement, distribution plan, advisory agreement, prospectus, the fundamental investment objectives or contingent deferred sales charge arrangement in respect of such Additional Eligible Fund shall be deemed to refer to any change or modification thereof since such Addition Effective Date. The term "Addition Effective Date" shall mean with respect to any Additional Eligible Fund, the first date on which all of the following conditions shall have been satisfied: (i) the Program Agent shall have received a fully executed Additional Eligible Fund Addendum, together with such signed opinions of counsel to the applicable Company, the Distributor, the Advisor and the Seller, each dated a date reasonably near the Addition Effective Date, as the Program Agent shall have reasonably requested, all in form, scope and substance reasonably satisfactory to the Program Agent; provided, however, that the Seller, the Advisor and the Distributor will not be required to deliver a True Sale opinion in connection with such addition; (ii) the Program Agent shall have received such instruments, certificates and documents regarding the addition of such Additional Eligible Fund from the Distributor, the Seller, the Advisor and the applicable Company, as the Program Agent shall have reasonably requested; provided, however, that an officer's certificate in the form of Exhibits B-1 and B-2 shall not be required; (iii) the Program Agent and the Seller shall have agreed in writing to any change in the Purchase Price Percentage applicable to the Receivables relating to such Fund; and (iv) the Program Agent shall have received evidence satisfactory to it that (a) the conditions in respect of such Additional Eligible Fund set forth in Section 3.01 of this Agreement immediately after the Addition Effective Date shall be satisfied, and (b) that on such Addition Effective Date the Receivables relating to such Additional Eligible Fund shall constitute Eligible Receivables. 3 8 ARTICLE III CONDITIONS PRECEDENT Section 3.01. Conditions Precedent to Effectiveness. The effectiveness of the Existing Purchase Agreement was subject to the fulfillment of the following conditions precedent: (a) the Existing Purchase Agreement, the Servicing Agreement, the Collection Agency Agreement, the Irrevocable Payment Instructions, the Underwriting Agreement and the Transfer Agreement (as such terms are defined in the Existing Purchase Agreement) shall each have been duly executed by the parties thereto and shall each be in full force and effect, and the Program Agent shall have received fully executed copies thereof; (b) the Program Agent shall have received fully executed copies of each Underwriting Agreement, Distribution Plan, Prospectus and Advisory Agreement relating to each Fund which shall be in full force and effect and shall be in form and substance reasonably satisfactory to the Program Agent; (c) the Program Agent shall have received such opinions of counsel as it shall have reasonably requested in form, scope and substance reasonably satisfactory to the Program Agent; (d) the Program Agent shall have received a signed certificate of the President or a Vice President and a Secretary or Assistant Secretary of the Distributor, the Seller and the Advisor, substantially in the form of Exhibits B-1, B-2 and B-3 hereto, respectively; (e) the Program Agent shall have received time stamped receipt copies of proper financing statements duly filed under the UCC of all jurisdictions that the Program Agent may reasonably deem necessary or desirable in order to perfect the ownership interest of the Seller in the Receivables sold pursuant to the Transfer Agreement and to perfect the ownership interest of the Purchaser in the Purchased Receivables relating to each Fund, as contemplated by the Existing Purchase Agreement, and the Collections in respect thereto, each of which shall be in form, scope and substance satisfactory to the Program Agent as of the date given; (f) the Program Agent shall have received certified copies of requests for information (Form UCC-11) (or a similar search report certified by a party acceptable to the Program Agent), dated reasonably near the initial Purchase Date, listing all effective financing statements which name the Distributor or the Seller (under their present names or any previous names), as debtor and which are filed in the jurisdictions in which filings were required to be made pursuant to Section 3.01(e), together with copies of such financing statements (none of which, shall indicate any Adverse Claim on any Receivables); and (g) the Board of Trustees of each Company shall have approved the Distribution Plan and Underwriting Agreement relating to each Fund related to such Company by a vote of the majority of its Trustees who are not interested persons, within the meaning of the Investment Company Act, in recognition of the transactions contemplated by the Facility Documents by resolution acceptable as of the date given to the Program Agent. 4 9 Section 3.02. Conditions Precedent to the Purchaser's Obligation to Purchase Receivables. The obligation of the Purchaser to purchase Receivables relating to a Fund on any Purchase Date shall be subject to the fulfillment at or prior to the time of such Purchase Date of the following conditions: (a) no Event of Termination (or event which, with the passage of time or notice, or both, would constitute an Event of Termination) shall have occurred and be continuing at or prior to such Purchase Date or shall result therefrom and there shall not be continuing any proceeding of the type referred to in Section 6.01(f); (b) the Seller (as Servicer or otherwise) shall have delivered to the Program Agent all Purchaser Reports, Transfer Agent Reports and Sub-transfer Agent Reports as and when required to have been delivered pursuant to this Agreement and the Servicing Agreement, which shall be in form and substance reasonably satisfactory to the Purchaser and the Program Agent; (c) the Receivables relating to such Fund to be purchased on the applicable Purchase Date shall constitute Eligible Receivables; (d) each of the Facility Documents shall be in full force and effect; (e) as of any Calculation Date commencing with November 30, 2000 the Weighted Average Percentage Decline in the Net Asset Value of Shares of all Funds (adjusted for stock splits and excluding declines in the Net Asset Value resulting from the payment of Normal Distributions) from the end of the immediately preceding calendar month shall not be twenty-five percent (25%) or more, unless the aggregate Net Asset Value of Shares of the Funds relating to Purchased Receivables shall thereafter rise to a level of at least seventy-six percent (76%) of the aggregate Net Asset Value of Shares of the Funds as of the Calculation Date immediately preceding the Calculation Date that the condition specified in this clause (i) was not satisfied and was not subsequently complied with; (f) such Fund or the Company in respect of such Fund shall not be prevented by any Authority or by any Applicable Law from paying Collections or Related Collections relating to such Fund to the Demand Deposit Account for further credit to the Collection Account in accordance with the applicable Irrevocable Payment Instruction and neither such Fund nor the Company in respect of such Fund shall have so asserted in writing; (g) the Purchaser and the Program Agent shall have received from the Distributor, the Advisor and the Seller such instruments and documents as the Purchaser and the Program Agent may have reasonably requested in connection with the Receivables relating to such Fund and any Purchase Price payable on any such Purchase Date; (h) immediately after giving effect to all such purchases on such Purchase Date, the aggregate Unamortized Aggregate Purchase Price relating to the Purchased Receivables of all Funds shall not exceed the Purchase Limit; 5 10 (i) such Fund or the Company relating to such Fund shall not be subject to any of the events described in clauses (g), (q) or (r) of Section 6.01; and (j) such Fund (and in the case of any Fund which constitutes a Portfolio, the related Company in respect of such Fund) shall not have proposed or effected a merger, consolidation or other combination with or sale of its assets other than a Permitted Merger or proposed or effected any Liquidation Plan. ARTICLE IV REPRESENTATIONS AND WARRANTIES Section 4.01. Representations and Warranties of the Seller, the Distributor and the Advisor. Each of the Seller, the Distributor and the Advisor represents and warrants to the Purchaser and the Program Agent, as to itself, on and as of the date hereof and on and as of each Purchase Date, as follows: (a) it is duly organized and is validly existing and in good standing under the laws of the jurisdiction of its incorporation, with full corporate power and authority to own and operate its property, conduct the business in which it is now engaged and to execute and deliver and perform its obligations under this Agreement and the other Facility Documents to which it is a party; (b) it is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the nature of its business or the performance of its obligations under this Agreement and the other Program Documents to which it is a party requires such qualification, where the failure to be so qualified could give rise to a reasonable possibility of an Adverse Effect; (c) the execution, delivery and performance by it of this Agreement, the other Facility Documents to which it is a party and the other instruments and agreements contemplated hereby or thereby have been duly authorized by all requisite corporate action and have been duly executed and delivered by it and constitute its legal, valid and binding obligations, enforceable against it in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy laws and any other similar laws affecting the rights and remedies of creditors generally and by equitable principles; (d) (i) it has the requisite corporate power and authority and legal right to execute and deliver this Agreement and the other Facility Documents to which it is a party and to perform its obligations hereunder and thereunder, and (ii) the Distributor and the Seller have the requisite corporate power and authority and legal right to from time to time, sell Receivables (and in the case of the Seller, the Ancillary Rights with respect thereto) relating to each Fund, and the Collections with respect thereto in accordance with the terms of the Facility Documents and it has duly authorized each such sale by all necessary action; (e) neither the execution and delivery of this Agreement, the other Program Documents to which it is a party, or any instrument or agreement referred to herein or therein, or 6 11 contemplated hereby or thereby, nor the consummation of any of the transactions herein or therein contemplated, nor compliance with the terms, conditions and provisions hereof or thereof by it (i) will conflict with, or result in a breach or violation of, or constitute a default under, its certificate of incorporation or by-laws, (ii) will conflict with, or result in a breach or violation of, or constitute a default under, or permit the acceleration of any obligation or liability in, or but for any requirement of the giving of notice or the passage of time (or both) would constitute such a conflict with, breach or violation of, or default under, or permit any such acceleration in, any contractual obligation or any agreement or document to which it is a party or by which it or any of its properties is bound (or to which any such obligation, agreement or document relates, or under any Underwriting Agreement, any Advisory Agreement or any Distribution Plan) where such conflict, breach or violation could give rise to a reasonable possibility of an Adverse Effect, (iii) will violate any Applicable Law, the violation of which could give rise to a reasonable possibility of an Adverse Effect, (iv) could give rise to or permit the creation or imposition of any Adverse Claim upon any Receivables or any Collections or any Related Collections relating to any Fund, or (v) could, in and of themselves, give rise to the termination of any Underwriting Agreement, any Advisory Agreement or any Distribution Plan; (f) it has obtained all Governmental Authorizations and Private Authorizations, and made all Governmental Filings necessary for the execution, delivery and performance by it of this Agreement, the other Program Documents to which it is party and the agreements and instruments contemplated hereby or thereby and no consents which have not been obtained or waivers under any instruments to which it is a party or by which it or any of its properties is bound are required to be obtained or made by it in connection with the execution, delivery or performance of this Agreement and the other Program Documents, except to the extent the failure to so obtain or make the same could not give rise to a reasonable possibility of an Adverse Effect; (g) it is not in default in any of its obligations under this Agreement or any other Program Document to which it is a party which default could give rise to a reasonable possibility of an Adverse Effect; (h) there are no proceedings or investigations pending, or, to the best of its knowledge, threatened, against it before any Authority (i) asserting the invalidity of this Agreement, any other Facility Document to which it is a party or any certificate, document or agreement executed by it in connection herewith or therewith, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Facility Document, or (iii) seeking any determination or ruling which, if granted, could adversely affect the performance by it of its obligations under, or the validity or enforceability of, this Agreement, any other Facility Document to which it is a party or any agreement, certificate or document executed by it in connection herewith or therewith, which in each case, if adversely determined could give rise to a reasonable possibility of an Adverse Effect; (i) it is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act; (j) it is not engaged principally or as one of its important activities in the business of extending, or arranging for the extension of, credit for the purpose of purchasing or 7 12 carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System and no part of the proceeds of the purchase price paid to it for Receivables under any Facility Document will be used to purchase or carry any margin stock within the meaning of said regulation or to extend credit to others for such purpose; (k) (i) all information (including, without limitation, the Purchaser Reports, the Transfer Agent Reports, the Sub-transfer Agent Reports and the E-Mail Purchaser Reports) provided by it or any of its Affiliates, any Transfer Agent, any Sub-transfer Agent (other than information prepared by an Unaffiliated Agent) or by any of their respective agents, auditors, legal counsel or other representatives or any other Person at the request of any of the foregoing to the Purchaser, the Program Agent or any other Person in writing for purposes of or in connection with this Agreement, the other Facility Documents to which it or any of its Affiliates is a party or the transactions contemplated hereby or thereby (including without limitation each Purchaser Report, each Transfer Agent Report and each Sub-transfer Agent Report (other than a Transfer Agent Report or Sub-transfer Agent Report prepared by an Unaffiliated Agent)) is, and all such information hereafter provided by any such Person to the Purchaser, the Program Agent or any other Person in writing will be true, correct and complete in all material respects on the date such information is stated or certified and no such information contains, or will contain, any material misrepresentation or any omission to state therein matters necessary to make the statements made therein not misleading in any material respect, and (ii) to the best of its knowledge, all information (including, without limitation, the Transfer Agent Reports and the Sub-transfer Agent Reports) prepared or provided by or on behalf of any Unaffiliated Agent, to the Purchaser or the Program Agent in writing for purposes of or in connection with this Agreement, the other Facility Documents or the transactions contemplated hereby or thereby is, and all such information hereafter provided by any such Unaffiliated Agent to the Purchaser, the Program Agent or any other Person in writing will be true, correct and complete in all material respects on the date such information is stated or certified and, to the best of its knowledge, no such information contains, or will contain, any material misrepresentation or any omission to state therein matters necessary to make the statements made therein not misleading in any material respect; 8 13 (l) neither the Transfer Agent, any Company nor any Fund is prevented by any Applicable Law from paying the Collections or Related Collections directly to the Demand Deposit Account for further credit to the Collection Account in accordance with the applicable Irrevocable Payment Instruction; (m) the Purchased Receivables relating to each Fund constitute Eligible Receivables; (n) no Share of a Fund to which a Purchased Receivable relates contains any Conversion Feature other than a Permitted Conversion Feature; (o) no Share of a Fund taken into account in computing the Purchase Price paid pursuant to this Agreement entitles the holder thereof to redeem the same in a Free Redemption except in the specific situations set forth in the Prospectus of such Fund as in effect on the date hereof; (p) each of the Companies and the Advisor has complied with the Fundamental Investment Objectives relating to each Fund and such Fundamental Investment Objectives for each such Fund have not changed from those set forth in Schedule IV to the Purchase Agreement, except as shall have been consented to in writing by the Program Agent; (q) it, each Company, each Fund, the Advisory Agreements, the Underwriting Agreements, the Prospectus of each Fund, the Distribution Plans and the CDSC arrangements, in each case relating to Shares of each Fund, are in compliance in all material respects with Applicable Law, including, without limitation, Rule 12b-1 of the Investment Company Act and the Conduct Rules; (r) the Asset Based Sales Charge and CDSC arrangement relating to the Shares of each Fund and the payments provided for in, and actually being made pursuant to, the Distribution Plan and the Prospectus for each such Fund are fairly and accurately described in the Distribution Plan and Prospectus relating to each such Fund; and (s) a true, correct and complete copy of each Underwriting Agreement, each Distribution Plan, each Advisory Agreement and each Prospectus in effect on the date of this Agreement has been delivered to the Program Agent on or before the date hereof, such Underwriting Agreements, Distribution Plans and Advisory Agreements are each in full force and effect and have not been amended or modified in any manner after the date hereof, except for such amendments or modifications to the Prospectuses which do not affect any Fundamental Investment Objectives set forth in Schedule IV hereto or any CDSC arrangement and which do not otherwise give rise to a reasonable possibility of a Adverse Effect, unless the same is consented to in writing by the Program Agent and such consent specifies the Fundamental Investment Objectives relating to each affected Fund and amends Schedule IV in order to accurately and completely reflect the fundamental investment objectives of each such affected Fund set forth in the then current Prospectus of such Funds. 9 14 Section 4.02. Additional Representations and Warranties of the Seller. The Seller represents and warrants to the Purchaser and the Program Agent on and as of the date hereof and on and as of each Purchase Date as follows: (a) each transfer of Receivables and the Ancillary Rights with respect thereto to the Purchaser under this Agreement constitutes a valid and complete True Sale to the Purchaser of all right, title and interest in and to such Purchased Receivables, the Ancillary Rights with respect thereto and the Collections in respect thereto, free and clear of any Adverse Claim; such transfer has not been made with an intent to hinder, delay or defraud any present or future creditor; the Purchase Price for such Purchased Receivables and the Ancillary Rights with respect thereto is fair consideration and of reasonably equivalent value to the Purchased Receivables; and immediately after each purchase pursuant to this Agreement the Seller will remain solvent and will have adequate capital for the conduct of its business; (b) immediately after each purchase of Receivables by the Seller under the Transfer Agreement and immediately prior to each purchase of Receivables and the Ancillary Rights with respect thereto by the Purchaser hereunder, (i) no party claiming through the Distributor or the Seller has any right, title or interest in such Receivables, the Ancillary Rights with respect thereto or the Collections in respect thereto, including any payments or Proceeds in respect thereto, (ii) the Seller owns such Receivables, the Ancillary Rights with respect thereto and the Collections in respect thereto free and clear of all Adverse Claims or other such restrictions on transfer created by or arising out of the acts or omissions of the Seller, the Distributor, the Transfer Agent or any Selling Agent or any of its Affiliates, and (iii) such Receivables, the Ancillary Rights with respect thereto and the right to Collections in respect thereto have not been sold, transferred or assigned by the Seller to any other Person; (c) all action necessary or advisable to protect, preserve and perfect the Purchaser's first priority ownership interest in the Purchased Receivables, the Ancillary Rights in respect thereto and the Collections in respect thereto, free and clear of all Adverse Claims has been duly and effectively taken and no security agreement, financing statement, equivalent security or lien instrument or continuation statement covering all or any part of such Purchased Receivables or Ancillary Rights in respect thereto is required to be on file or on record in any jurisdiction, except such as may have been filed, recorded or made as contemplated by this Agreement and the other Facility Documents; (d) the Seller's principal place of business and principal executive office and the place where its records concerning the Purchased Receivables are kept are at its address specified in Section 5.02(b); however, certain records with regard to the AIM GT Funds will be maintained from time to time at 50 California Street, 27th Floor, San Francisco, California 94111-4624; (e) this Agreement and the actions of the Seller required to be taken pursuant to the terms hereof are and at all times shall be effective to transfer to the Purchaser all of the Seller's right, title and interest in, to and under the Purchased Receivables and the Ancillary Rights with respect thereto free and clear of any Adverse Claim; and 10 15 (f) the Seller owns all of the outstanding capital stock of the Distributor. Section 4.03. Additional Representations and Warranties of the Distributor. The Distributor represents and warrants to each of the Purchaser and the Program Agent on and as of the date hereof and on and as of each Purchase Date, as follows: (a) each transfer of Receivables to the Seller under the Transfer Agreement constitutes a valid and complete True Sale to the Seller of all right, title and interest of the Distributor in and to such Receivables and the Collections in respect thereto, free and clear of all Adverse Claims; such transfer has not been made with an intent to hinder, delay or defraud any present or future creditor; the purchase price for such Receivables is fair consideration and of reasonably equivalent value to the Receivables; and immediately after each purchase pursuant to the Transfer Agreement the Distributor will remain solvent and will have adequate capital for the conduct of its business; (b) immediately prior to each purchase of Receivables by the Seller under the Transfer Agreement, (i) no party claiming through the Distributor has any right, title or interest in such Receivables or the Collections in respect thereto, including any payments or Proceeds in respect thereto, (ii) the Distributor owns such Receivables and the Collections in respect thereto free and clear of all Adverse Claims or other restrictions on transfer, and (iii) such Receivables and the right to Collections in respect thereto have not been sold, transferred or assigned by the Distributor to any other Person; (c) all action necessary or advisable to protect, preserve and perfect the Seller's first priority ownership interest in the Purchased Receivables and the Collections in respect thereto, free and clear of all Adverse Claims has been duly and effectively taken and no security agreement, financing statement, equivalent security or lien instrument or continuation statement covering all or any part of such Receivables is required to be on file or on record in any jurisdiction, except as have been filed or recorded; (d) the Distributor's principal place of business and principal executive office and the place where its records, if any, concerning the Purchased Receivables are kept are at its address specified in Section 5.02(b); however, certain records with regard to the AIM GT Funds will be maintained from time to time at 50 California Street, 27th Floor, San Francisco, California 94111-4624; (e) the Transfer Agreement and the actions of the Distributor required to be taken pursuant to the terms thereof are and at all times shall be effective to transfer to the Seller all of the Distributor's right, title and interest in the Purchased Receivables free and clear of all Adverse Claims; (f) the Distributor is not in default in any of its obligations under this Agreement or any other Program Document to which the Distributor is a party which default gives rise to a reasonable possibility of an Adverse Effect; and 11 16 (g) a true and complete copy of the Transfer Agreement has been delivered to the Program Agent and has not been amended in any manner which gives rise to a reasonable possibility of an Adverse Effect. ARTICLE V COVENANTS Section 5.01. Affirmative Covenants of the Seller, the Distributor and the Advisor. Each of the Seller, the Distributor and the Advisor covenants and agrees that it shall: (a) and shall cause the Transfer Agent to, and shall use its best efforts to cause each Selling Agent to, (i) duly observe and conform to all requirements of Applicable Law relative to it, the conduct of its business or its properties or assets, (ii) preserve and keep in full force and effect its corporate existence, rights, privileges and franchises, and (iii) obtain, maintain and keep in full force and effect all Governmental Authorizations and Private Authorizations which are necessary or appropriate to properly carry out the transactions contemplated to be performed by it under this Agreement and the other Program Documents, except in such case where the failure to so observe, conform to, preserve, obtain, maintain or keep in full force and effect could not give rise to a reasonable possibility of an Adverse Effect; (b) duly fulfill all obligations on its part to be performed under or in connection with this Agreement and the other Facility Documents and the agreements and instruments entered into in connection herewith or therewith and use its best efforts to cause each Company to duly fulfill and perform its obligations under the Facility Documents, the non-performance of which gives rise to a reasonable possibility of an Adverse Effect; (c) promptly deliver to the Program Agent copies of any amendments or modifications to its certificate of incorporation or by-laws, certified by one of its authorized officers; (d) (i) promptly give written notice to the Program Agent of the occurrence of any Event of Termination (or event which, with the passage of time or notice, or both, would constitute an Event of Termination), the failure of any conditions precedent set forth in Section 3.02 to be fully satisfied during the period prior to the Termination Date, or any material breach of any term or condition of any Facility Document, which in each case relates to or is caused by it or any of the Affiliates or the performance of any such Persons under any Facility Document, (ii) give written notice to the Program Agent, promptly after it becomes aware thereof, of any other Event of Termination (or event which with the passage of time, notice or both would constitute such an Event of Termination, or the failure of any other conditions precedent set forth in Section 3.02 or any other material breach of any terms or conditions of any Facility Documents, (iii) promptly give written notice to the Program Agent of any litigation or proceedings with respect to it or any Significant Affiliates of the Seller or affecting it, any Significant Affiliates of the Seller or any of their respective assets or properties, which if adversely determined, could give rise to a reasonable possibility of an Adverse Effect, and (iv) 12 17 upon request by the Program Agent, provide such other information concerning its and the Seller's Significant Affiliates' assets, financial condition or operations, as the Program Agent may from time to time reasonably request; (e) cause to be computed, paid and discharged when due all taxes, assessments and other charges or levies of any Authority imposed upon it, or upon any of its income or assets, prior to the day on which any lien could be imposed in respect thereof unless and to the extent that the same shall be contested in good faith by appropriate proceedings and could not give rise to a reasonable possibility of an Adverse Effect; (f) to the extent obtained or received by it, furnish or cause to be furnished to the Program Agent a copy of all Private Authorizations and all Governmental Authorizations obtained or made or required to be obtained or made by it in connection with the transactions contemplated by this Agreement, the Transfer Agreement, the Servicing Agreement and any other Facility Document to which it is a party; (g) the Distributor and the Seller shall annually or more frequently as the Program Agent may request upon the occurrence of an Event of Termination (or an event which upon the passage of time or notice, or both, would constitute an Event of Termination) and at the sole cost and expense of the Seller (i) cause an independent nationally recognized accounting firm selected by it and reasonably satisfactory to the Program Agent to enter its premises (and each other Person to whom it delegates any of its duties under the Facility Documents) and examine and audit the books, records and accounts relating to the Receivables, the Collections in respect thereto and its or such other Person's performance under the Facility Documents, (ii) permit such accounting firm to discuss its or such other Person's affairs, finances, accounts and performance under the Facility Documents with its or such other Person's officers, partners, employees and accountants, (iii) cause such accounting firm to provide the Purchaser and the Program Agent with a certified report in respect of the foregoing, which shall be in form and scope reasonably satisfactory to the Program Agent and the Purchaser, and (iv) authorize such accounting firm to discuss such affairs, finances, records and accounts with representatives of the Program Agent or the Purchaser and any Permitted Designee; provided, however, that so long as no Event of Termination (or an event which upon the passage of time or notice, or both, would constitute an Event of Termination) shall have occurred or be continuing, such audits shall be limited to one per year and it shall not be obligated to reimburse the Purchaser or the Program Agent for costs or expenses of any single audit which together with the costs and expenses of all other audits of the Distributor or the Seller, as the case may be, under this Section 5.01(g) exceed $7,500 per annum; (h) permit and cause each Person to which it delegates any of its duties under the Facility Documents to permit the Purchaser, the Program Agent or any Permitted Designee to, upon reasonable advance notice and during normal business hours, visit and inspect its and such Person's books, records and accounts relating to the Receivables, the Collections and Related Collections in respect thereto and its and such other Person's performance under the Facility Documents and to discuss the foregoing with its and such other Person's officers, partners, employees and accountants, all as often as the Purchaser, the Program Agent, any such Permitted Designee may reasonably request, all at the cost and expense of the requesting party; provided, however, that if under the terms of any agreement with any Person to whom it 13 18 delegates any of its duties hereunder, only the Seller, the Advisor or the Distributor, as the case may be, is permitted to visit and inspect such Person's books, records and accounts, it shall at the request of the Program Agent or any Permitted Designee, exercise the rights specified in this Section 5.01(h) on behalf of such requesting parties, as frequently as the terms of any such agreement permit, but in no event less frequently than annually; provided, further, however, that so long as no Event of Termination (or event which with the passage of time, notice or both, would constitute an Event of Termination) shall have occurred and be continuing, such inspections by the Purchaser, the Program Agent or any Permitted Designee shall be limited to no more than two per calendar year; (i) promptly, at its expense, execute and deliver to the Program Agent and the Purchaser such further instruments and documents, and take such further action as the Program Agent or the Purchaser may from time to time reasonably request, in order to further carry out the intent and purpose of this Agreement and the other Facility Documents and to establish and protect the rights, interests and remedies created, or intended to be created, hereby and thereby, including, without limitation, the execution, delivery, recordation and filing of financing statements and continuation statements under the UCC of any applicable jurisdiction; (j) immediately deliver to the Program Agent copies of all notices, requests, agreements, amendments, supplements, waivers and other documents received or delivered by it under or with respect to any of the Facility Documents or any Selling Agent's Agreement to the extent that such notices, requests, agreements, supplements, waivers and other documents relate to any matter, change, situation, action or occurrence which gives rise to a reasonable possibility of an Adverse Effect; (k) in the event that, notwithstanding the Irrevocable Payment Instructions it shall receive any Collections or Related Collections from any Company or the Transfer Agent, promptly upon its receipt of any such Collections or Related Collections remit the same to the Demand Deposit Account for further credit to the Collection Account and until such funds are so deposited into the Demand Deposit Account, ensure that such amounts are not commingled with any other funds; (l) promptly notify the Program Agent and the Purchaser of any material adverse change with respect to its or any of the Seller's Significant Affiliates' business, properties (in respect of properties, other than in the ordinary course of business, as conducted on September 30, 2000), condition (financial or otherwise), results of operation or prospects since September 30, 2000; (m) promptly furnish to the Program Agent such other information as the Program Agent or the Purchaser may reasonably request; (n) subject to its fiduciary obligations, if any, to the Funds and by a change in applicable law after the date of this Agreement, use its best efforts to discourage any change in the Fundamental Investment Objectives in respect of any Fund as set forth in Schedule IV hereto, and, in the event it is unable to use its best efforts as a consequence of its fiduciary obligations to the Funds or by any such applicable law, it shall, prior to taking any action inconsistent with such best efforts, or failing to take the action it could otherwise take: (i) notify the Purchaser and 14 19 the Program Agent, in writing of the nature of such change, (ii) provide certification by one of its responsible officers that such change is necessary in order to comply with such fiduciary obligations or by such a change in applicable law, and (iii) unless waived by the Program Agent, enter into such undertakings as the Program Agent shall request, in form, scope and substance satisfactory to the Program Agent whereby it will hold the Program Agent and the Purchaser harmless from any and all losses, costs, expenses and damages sustained as a consequence of any such change in Fundamental Investment Objectives, except to the extent (A) such change is required solely by a change in law applicable to such Fund, or (B) to the extent the Purchaser or the Program Agent, as the case may be, is indemnified for such loss pursuant to any other provision of the Facility Documents; provided, that notwithstanding the foregoing, changes in such Fundamental Investment Objectives in respect of any Fund as set forth in Schedule IV hereto may be made with the prior written consent of the Program Agent; (o) use its best efforts to cause each Company to comply with all Applicable Law; (p) subject to its fiduciary obligations, if any, to the Funds, use its best efforts to obtain the approval of the Board of Trustees of each Company in respect of Shares of each Fund to: (a) annually re-approve the Distribution Plan and the Underwriting Agreement relating to each Fund (if necessary in order to continue payments in respect of the Purchased Receivables relating to each such Fund) and its practices with respect thereto by each Company as of the date of this Agreement, and (b) in the event any of the foregoing shall be terminated with respect to any such Fund, to approve a new distribution plan and distribution agreement between the Distributor and each Company in respect of such Fund so as to permit the continued payments in respect of the Purchased Receivables relating to such Fund as though no such termination had occurred and in the event that it is unable to use its best efforts as a consequence of such fiduciary obligations to the Funds, it shall, prior to taking any action inconsistent with such best efforts, or failing to take any action it could otherwise take: (i) notify the Purchaser and the Program Agent in writing of the nature of such failure to use its best efforts, and (ii) provide certification by a responsible officer of the Seller that such failure to use its best efforts is required in order to comply with such fiduciary obligations; (q) provide prompt written notice to the Program Agent of any action by its Board of Trustees, or officers or the Board of Trustees of any Company, to make or propose any modification, amendment or supplement to, or any waiver of any provisions of, or any termination of, any Distribution Plan, any Advisory Agreement, any CDSC arrangement, any Underwriting Agreement, any Prospectus (other than modifications to the Prospectuses which neither affect the CDSC arrangement, the Fundamental Investment Objectives as reflected in Schedule IV hereto or otherwise give rise to a reasonable possibility of an Adverse Effect) or the Fundamental Investment Objectives of any Company with respect thereto, each as in effect on the date of this Agreement (or as hereafter modified, amended, waived or supplemented with the written consent of the Program Agent), or any modification, amendment, supplement or waiver in the amounts payable or actually being paid thereunder in respect of the Receivables, each as in effect on the date of this Agreement, or if a new distribution plan, advisory agreement, contingent deferred sales charge arrangement, prospectus or underwriting agreement is proposed to be approved and entered into, provide the Program Agent with copies of any such proposed modification, amendment, supplement or waiver, as adopted, and a newly adopted distribution 15 20 plan, contingent deferred sales charge arrangement, advisory agreement or underwriting agreement promptly after such proposal, modification, amendment, supplement, waiver or adoption has been made; (r) use its best efforts to keep each Irrevocable Payment Instruction in full force and effect; (s) take all action necessary to protect and perfect the Purchaser's first priority ownership interest in the Purchased Receivables and the Collections in respect thereof, free and clear of all Adverse Claims; (t) (i) cause or ensure that all information (other than information prepared by an Unaffiliated Agent) provided in writing to the Purchaser, the Program Agent or any other Person for purposes of or in connection with this Agreement or any other Facility Document or the transactions contemplated hereby or thereby by it, any of its Affiliates, the Transfer Agent, each Sub-transfer Agent, each of its agents, representatives, officers, employees, auditors or counsel (or any other Person at its request, its agents, representatives, officers, employees, auditors or counsel) is, and all such information hereafter provided in writing by any such Person to the Purchaser, the Program Agent or any other Person to be true, correct and complete in all material respects on the date such information is stated or certified and ensure that no information contains, or will contain, any material misrepresentation or any omission to state therein matters necessary to make the statements made therein not misleading in any material respect, and (ii) use its best efforts to cause or ensure that all information provided in writing to the Purchaser, the Program Agent for purposes of or in connection with this Agreement or any other Facility Document or the transactions contemplated hereby or thereby which is prepared by each Unaffiliated Agent is, and all such information hereafter provided in writing to the Purchaser, the Program Agent or any other Person will be true, correct and complete in all material respects on the date such information is stated or certified and use its best efforts to ensure that no such information contains, or will contain, any material misrepresentation or any omission to state therein matters necessary to make the statements made therein not misleading in any material respect; (u) in respect of the Advisor, manage each Fund in accordance with the fundamental investment objectives and policies in respect of such Fund as reflected in the most current Prospectus for each Fund; and (v) cause and ensure that all actions, which the opinion of Ballard Spahr Andrews & Ingersoll, LLP dated on or about the date hereof on certain bankruptcy matters including "true sale" assumes will be taken or not taken by it, will be taken or not taken by it. Section 5.02. Negative Covenants of the Seller, the Distributor and the Advisor. Each of the Seller, the Distributor and the Advisor covenants and agrees that it shall not: (a) permit to exist any Adverse Claims on, or otherwise attempt to transfer any interest in, any Receivables, any Ancillary Rights in respect thereto, the Collections or Related Collections or the Seller's Class A and C CDSC Portion or any interest in any of the 16 21 foregoing; provided, however, that in the event that the Purchaser shall determine not to purchase certain Receivables relating to Shares of any Fund or the Seller determines to sell or pledge the Seller's Class A and C CDSC Portion, the Seller may transfer all or a portion of its interest in such Receivables and the Ancillary Rights with respect thereto to another Person provided each of the following conditions are met: (1) that such Person, the Program Agent and the Purchaser shall have entered into a mutually satisfactory intercreditor agreement and amendment to the Collection Agency Agreement as contemplated by Section 15(a) thereof, and (2) the Program Agent shall have received such certificates and opinions as it may reasonably request in connection therewith all in form, scope and substance reasonably satisfactory to the Program Agent; (b) in respect of the Seller and the Distributor, move its principal executive office or the place where it keeps its records concerning the Purchased Receivables from the offices specified in Sections 4.02(d), 4.03(d) and 9.03, unless (a) it shall have given to the Program Agent and the Purchaser not less than twenty (20) days prior written notice of its intention to do so, clearly describing the new location and (b) it shall have taken such action, satisfactory to the Program Agent and the Purchaser, to maintain the title or ownership of the Purchaser in the Purchased Receivables and the Ancillary Rights with respect thereto at all times fully perfected and in full force and effect; (c) without the prior written consent of the Program Agent, amend, waive, terminate or otherwise modify the terms of any Irrevocable Payment Instruction or the Transfer Agreement or take any action inconsistent with any Irrevocable Payment Instruction or the Transfer Agreement; provided, that it may, without the consent of the Program Agent (but with prompt written notice to the Program Agent), amend Schedule I to the Irrevocable Payment Instruction solely to add an Additional Eligible Fund to such Schedule in accordance with Section 2.03; (d) until the Program Termination Date, change its operations in a manner which could give rise to a reasonable possibility of an Adverse Effect, without the prior written consent of the Program Agent; (e) reflect the Purchased Receivables or Collections in respect thereto as being owned by it or any of its Affiliates; (f) upon the occurrence of a Complete Termination (as defined in the Distribution Plan in effect on the date hereof) in respect of Shares of any Fund, directly or indirectly compensate the Distributor or any other Person for any services for which the Service Fee for such terminated Fund were intended to compensate the Distributor; (g) (i) cancel, terminate, amend, modify, supplement or waive any term or condition of any Underwriting Agreement, any Distribution Plan, any Advisory Agreement any Fundamental Investment Objectives, or the CDSC obligations of any holders of Shares of any Fund, each as in effect on the date hereof (or as hereafter modified, amended or supplemented with the written consent of the Program Agent) (other than to permit Free Redemptions as contemplated by the Prospectus of such Fund in effect on the date hereof (or as hereafter modified, amended or supplemented with the written consent of the Program Agent)), except 17 22 with the prior written consent of the Program Agent; provided, that with respect to the Advisory Agreements, the consent of the Program Agent shall only be required in connection with any such amendment, modification or waiver to the extent the same gives rise to a reasonable possibility of an Adverse Effect, (ii) take any action designed to permit any Company to do so, (iii) undertake any actions that are inconsistent with a program to maintain each Distribution Plan, each CDSC arrangement, any Irrevocable Payment Instruction, each Underwriting Agreement and the practices of any Company in respect thereof, each as in effect on the date hereof (or as hereafter modified, amended or supplemented with the written consent of the Program Agent) in full force and effect as they exist on the date of this Agreement and to maintain good relations with each Company and the Board of Trustees of each Company, or (iv) without limiting the generality of the foregoing, take any action or omit to take any action (other than redemptions of Shares in the ordinary course of business as contemplated by the Prospectus for each Fund in effect on the date of this Agreement) that could with respect to clauses (i), (ii), (iii) or (iv) of this Section 5.02(g), result in either (A) the aggregate Sales Charge paid or payable by any Company in respect of the sales of Shares of any Fund being less than the Maximum Aggregate Sales Charge Allowable (including interest thereon at the Maximum Interest Allowable) which, as of the last date upon which Receivables are purchased by the Purchaser under the Purchase Agreement, is equal to not less than the sum of 6.25% of the total Issue Price of the Shares of such fund sold during such period, plus interest thereon at the prime rate in effect plus one percent (1%) per annum, (B) the amount in clause (A) above accruing less frequently than daily or being payable in installments less frequently than monthly or in amounts which are less on the average than the daily equivalent of .75% per annum of the average daily Net Asset Value, or (C) otherwise could give rise to a reasonable possibility of an Adverse Effect; (h) except as a result of a Permitted Change in Control, or as specifically consented to in writing by the Program Agent: (i) sell or otherwise dispose of all or a substantial portion of its assets, (ii) consolidate with or merge into any other entity, or (iii) acquire all or substantially all of the assets of another Person, if any such actions gives rise to a reasonable possibility of an Adverse Effect; (i) (1) permit the record ownership on the records of the Transfer Agent of any Share of any Fund to be in the name of a Merrill Lynch, Pierce, Fenner & Smith street account, unless the Sub-transfer Agent for such ML Omnibus Shares has tracking capabilities, procedures and reporting practices sufficient to allocate Collections and Related Collections in respect of such ML Omnibus Shares as contemplated by the Allocation Procedures, or (2) subject to Section 2(a) of the Collection Agency Agreement, permit any Shares of any Fund (other than ML Omnibus Shares) to be held in any Omnibus Account, unless (x) the tracking capabilities, procedures and reporting practices of the related Sub-transfer Agent are sufficient in order to allocate Collections and Related Collections as contemplated by the provisions of the Allocation Procedures relating to Non-ML Omnibus Shares, and (y) the Program Agent shall have approved in writing the form of the Sub-transfer Agent Report of such Sub-transfer Agent which sets forth the methodology to be used by such Sub-transfer Agent to allocate Shares as contemplated by the Allocation Procedures. 18 23 Section 5.03. Additional Covenants of the Seller. The Seller covenants and agrees that it shall: (a) keep proper books of record and account in accordance with its normal business practice in which full and appropriate entries shall be made of all dealings or transactions in relation to its business and activities and shall mark its data processing or other records, if any, so as to clearly indicate that the Purchased Receivables and the Ancillary Rights in respect thereto have been sold to the Purchaser; (b) furnish to the Program Agent and the Purchaser: (A) annually within 150 days after the end of each fiscal year: (i) unaudited consolidated financial statements of the Seller and its respective subsidiaries prepared in accordance with GAAP for such fiscal year, (ii) audited consolidated financial statements of AMVESCAP plc and its respective subsidiaries (including the Seller, the Advisor and the Distributor) prepared in accordance with generally accepted accounting principles in the United Kingdom for such fiscal year, and (iii) unaudited balance sheets of the Advisor and the Distributor if not included in clause (i) above, prepared in accordance with GAAP for such fiscal year and, in any event, an unaudited income statement and balance sheet of the Advisor and the Distributor prepared in accordance with GAAP for such year; and (B) promptly upon preparation, copies of the semi-annual unaudited reports and annual audited reports of each Company; (c) use the Purchase Prices paid to it on each Purchase Date hereunder solely for the purpose of purchasing Receivables or for reimbursing itself for the purchase price of the Receivables purchased under the Transfer Agreement pursuant to and in accordance with the terms of the Transfer Agreement; provided, that the Seller shall be entitled to retain the profit resulting from any difference between the purchase price paid to the Seller for the Receivables and the purchase price paid by the Seller for the Receivables; (d) on the second Business Day following remittance to the Collection Account of the Seller's Class A and C CDSC Portion, notify the Collection Agent and the Program Agent in writing of the amount thereof by telefax or electronic mail and instruct the Collection Agent to immediately remit such amount to the Seller's Account; (e) treat each transfer of Receivables and the Ancillary Rights with respect thereto pursuant to this Agreement as a sale and not as a secured loan on its financial statements, books and records and tax returns, including without limitation its United States federal income tax returns, except to the extent such treatment is prohibited by a change in Applicable Law after the date hereof; and 19 24 (f) shall cause each other Person acting on its behalf or as its agent to keep such books, records, accounts and other information, as Persons carrying out similar functions typically maintain, so as to verify and document its compliance with its obligations under the Facility Documents. Section 5.04. Additional Covenants of the Distributor. The Distributor covenants and agrees that it shall: (a) use its best efforts to cause each Selling Agent, to duly fulfill all obligations on its or any such Selling Agent's part to be performed under or in connection with this Agreement, the Underwriting Agreements, the Distribution Plans and the other Facility Documents, the non-performance of which gives rise to a reasonable possibility of an Adverse Effect; (b) keep proper books of record and account in accordance with its normal business practice in which full and appropriate entries shall be made of all dealings or transactions in relation to its business and activities and shall mark its data processing or other records, if any, so as to clearly indicate that the Purchased Receivables have been sold to the Seller; (c) promptly (i) notify the Program Agent in writing of all filings with the SEC, any report on Form N-SAR (or successor form), any registration statement on Form N-1A (or successor form), any prospectus, any statement of additional information or any amendment or supplement to any of the foregoing of each Fund, all proxy statements and all other notices (out of the ordinary course) to shareholders of any Company or any Fund and any other filings (out of the ordinary course) made by any Company in respect of any Fund, and (ii) to the extent the same are not readily obtainable by the Program Agent through the Securities and Exchange Commission's Electronic Data Gathering, Analysis and Retrieval system or other public on-line sources, deliver to the Program Agent copies of such filings and mailings; and (d) treat each transfer of Receivables pursuant to the Transfer Agreement as a sale and not as a secured loan on its financial statements, books and records and tax returns, including without limitation its United States federal income tax returns, except to the extent such treatment is prohibited by a change in Applicable Law after the date hereof; (e) ensure that the tracking capabilities of the Distributor, each Company and each Transfer Agent and each Sub-transfer Agent for each Fund are sufficient to: (i) track which Receivables constitute Purchased Receivables and the Shares in respect thereto as contemplated by the Allocation Procedures, and (ii) to allocate Collections and Related Collections in accordance with this Agreement (including the Allocation Procedures) and the Collection Agency Agreement; (f) exercise on behalf of the Purchaser all of the rights under the Underwriting Agreements, the Distribution Plans, each Irrevocable Payment Instruction, the Transfer Agreement and at law or equity to cause each Company and the Transfer Agent to pay to the Demand Deposit Agreement for further credit to the Collection Account all amounts due from each Company or the holders of the Shares in respect of the Purchased Receivables in 20 25 accordance with the applicable Irrevocable Payment Instruction; (ii) assist the Servicer in investigating delinquencies in the payment of Collections by any Company and the Transfer Agent; (iii) respond to inquiries of the Purchaser and the Program Agent relating to the Purchased Receivables and each Company's and the Transfer Agent's performance under the Facility Documents; and (iv) assist the Servicer in enforcement of the Purchaser's rights with respect to the Purchased Receivables and the Ancillary Rights with respect thereto; (g) maintain its net capital at such levels as are required by Applicable Law; and (h) shall cause each other Person acting on its behalf or as its agent to keep such books, records, accounts and other information, as Persons carrying out similar functions typically maintain, so as to verify and document its compliance with its obligations under the Facility Documents. ARTICLE VI EVENTS OF TERMINATION Section 6.01. Events of Termination. If any of the following events (each an "Event of Termination") shall occur: (a) the Distributor, the Seller (as Servicer or otherwise), the Advisor, the Transfer Agent, the Sub-transfer Agent or any Company shall fail to make or cause to be made in the manner and when due any payment or deposit to be made or to be caused to be made by it under this Agreement or any of the other Facility Documents and such failure shall continue for three (3) Business Days; or (b) the Distributor, the Seller (as Servicer or otherwise), the Advisor, the Transfer Agent or any Sub-transfer Agent shall fail to perform or observe any covenant or agreement on its part to be performed or observed under any Facility Document (other than those described in clause (a) of this Section 6.01) and such failure shall continue for three (3) Business Days; provided, that in respect of any Sub-transfer Agent such failure gives rise to a reasonable possibility of an Adverse Effect; or (c) (i) any representation or warranty made or deemed made by the Distributor, the Seller (as Servicer or otherwise), the Advisor (or any of their respective officers) under or in connection with any Facility Document shall have been incorrect in any material respect when made or deemed made, or (ii) any Purchaser Report, Transfer Agent Report, Sub-transfer Agent Report (including without limitation any Transfer Agent Report or Sub-transfer Agent Report prepared by any Unaffiliated Agent) or any other statement, certificate or report delivered by or on behalf of the Distributor or the Seller (as Servicer or otherwise) in connection with this Agreement or any other Facility Document, shall have been false, incorrect or misleading in any material respect when delivered; or (d) the Seller or any of its Significant Affiliates shall fail to pay, any amount in respect of any of its Debt in excess of $10,000,000, when the same becomes due and payable, or there shall occur any default by the Seller or any such Significant Affiliate which results or 21 26 could result in any of its Debt in excess of $10,000,000 being declared due and payable prior to its stated maturity date or due date; or (e) (i) the Purchaser shall cease to have a 100% undivided ownership interest in any Purchased Receivable, the Ancillary Rights with respect thereto and the Collections in respect thereto, free and clear of any Adverse Claim, or (ii) any purchase of Receivables and the Collections in respect thereto by the Seller pursuant to the Transfer Agreement or the Purchaser pursuant to this Agreement shall for any reason not constitute a True Sale thereof; or (f) (i) the Seller or any of its Significant Affiliates shall generally not pay its Debts as such Debts become due, or shall admit in writing its inability to pay its Debts generally, or shall make a general assignment for the benefit of creditors or in the case of the Distributor, the Distributor shall otherwise become "insolvent" within the meaning of SIPA; or (ii) any proceeding shall be instituted by or against the Seller or any such Significant Affiliate seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its Debts under any Law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of fifteen (15) days; or (iii) any of the actions sought in any proceeding described in (ii) above (including an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or (iv) the Seller or any such Significant Affiliate shall take any action to authorize any of the actions set forth above in this Section 6.01(f); or (g) there shall have occurred any material adverse change in (i) the financial condition of the Seller, the Distributor, the Advisor or each Company since September 30, 2000; or (ii) the Seller's, the Distributor's or each Company's operations as they relate to their respective abilities to perform their obligations under any Facility Document, or which gives rise to a reasonable possibility of an Adverse Effect; or (h) any Underwriting Agreement, any Advisory Agreement, any Distribution Plan, any Fundamental Investment Objectives, the CDSC arrangements applicable to holders of Shares of any Fund or the terms of any Conversion Feature in respect of any Share of any Fund, each as in effect on the date of this Agreement (or as hereafter modified, amended or supplemented with the consent of the Program Agent), shall be amended, waived, supplemented or modified, in a manner or by any means (including a change in Applicable Law) which, in the reasonable opinion of the Program Agent, could give rise to a reasonable possibility of an Adverse Effect, including, but not limited to (a) any change which could result in the aggregate Sales Charge paid or payable by the applicable Company in respect of the Shares of such Fund being less than the Maximum Aggregate Sales Charge Allowable as of the date hereof or (b) any change to or modification or waiver of the CDSC arrangements or Conversion Feature arrangements in respect of Shares of such Fund as in effect on the date of this Agreement (or as hereafter modified, amended or supplemented with the consent of the Program Agent), or (c) any change in the Fundamental Investment Objectives as reflected in Schedule IV hereto in respect of Shares of any Fund; or 22 27 (i) any Underwriting Agreement, any Distribution Plan, any Advisory Agreement or any CDSC arrangement applicable to holders of Shares of any Fund, in each case as in effect on the date of this Agreement (or as hereafter modified, amended or supplemented with the consent of the Program Agent), shall be terminated, no longer enforceable, or be otherwise ineffective, in whole or in part, for any reason, whether voluntarily or involuntarily, including without limitation by any Authority or as a result of any change in Applicable Law, unless (x) in respect of the applicable Fund a replacement Underwriting Agreement, Distribution Plan or Advisory Agreement, as the case may be, has become effective and which has terms, in the reasonable opinion of the Program Agent at least as favorable to the Distributor, the Advisor and the Purchaser, as the Underwriting Agreement, the Distribution Plan or the Advisory Agreement, as the case may be, each as in effect on the date of this Agreement (or as hereafter modified, amended or supplemented with the consent of the Program Agent), including, without limitation, in respect of the timing and amount payable in respect of the Purchased Receivables relating to such Fund as described in clause (h) above, and (y) no reasonable possibility of an Adverse Effect shall arise as a result thereof; or (j) except as a result of a Permitted Change in Control, the Seller shall cease to own directly or indirectly a majority of the issued and outstanding stock and a majority of the voting securities of the Distributor; or (k) the Securities Investor Protection Corporation, established under SIPA, shall have applied for a protective decree against the Distributor and the Distributor shall have failed to obtain a dismissal of such application within thirty (30) days after such application; or (l) the SEC shall have revoked the broker/dealer registration of the Distributor; or (m) the Distributor shall have failed to meet the minimum capital requirements prescribed from time to time by Rule 15c3-1 under the Exchange Act and such failure is not cured within thirty (30) days after such failure, it being understood that a determination by a relevant Authority shall not be deemed conclusive evidence of such failure so long as the Distributor is diligently contesting such determination in good faith by appropriate proceedings; or (n) the SEC or any other Authority shall have modified or terminated or shall propose to modify, revoke, repeal or terminate Rule 12b-1 of the Investment Company Act or the Conduct Rules in a manner which gives rise to a reasonable possibility of an Adverse Effect; or (o) the Distributor shall cease to be registered as a broker/dealer under the Exchange Act and with the NASD or the Advisor shall cease to be registered as an investment advisor under the Investment Advisers Act; or (p) any Company, any Transfer Agent or any Sub-transfer Agent shall fail to make or cause to be made in a timely manner any payment or deposit required to be made under any Distribution Plan, Underwriting Agreement or any Irrevocable Payment Instruction, or any Company or the Transfer Agent shall fail to withhold from redemption proceeds paid to any holder of a Share any CDSCs required to be withheld and remit such funds to the Demand 23 28 Deposit Account for further credit to the Collection Account in accordance with any Irrevocable Payment Instruction and such failure shall continue for three (3) Business Days, or any such Person shall be prevented by any Authority or by any Applicable Law from doing so or any Company, the Transfer Agent or Sub-transfer Agent shall so assert in writing; or (q) each Company shall be required by any Authority or any Applicable Law to suspend the sale of Shares of any Fund under circumstances that gives rise to a reasonable possibility of an Adverse Effect; or (r) each Company shall cease to regularly offer Shares of any Fund to the public under circumstances that gives rise to a reasonable possibility of an Adverse Effect; or (s) except as a result of a Permitted Change in Control, A I M Advisors, Inc. shall cease to act as the investment advisor of any Fund under the applicable Advisory Agreement; or (t) except as a result of a Permitted Change in Control or as specifically consented to in writing by the Program Agent, the Seller, the Advisor or the Distributor, as the case may be, shall (i) sell or otherwise dispose of all or a substantial portion of its assets, other than as agreed to in writing by the Program Agent, (ii) consolidate with or merge into any other entity, or (iii) acquire all or substantially all of the assets of another Person, unless the assets acquired are less than twenty-five percent (25%) of the assets of the Seller, the Advisor or the Distributor, as the case may be; then in respect of any occurrence of any such event, the Program Agent may in respect of each such occurrence, by notice to the Seller to be given within ninety (90) days of the Program Agent's receipt of notice of occurrence of each such event, declare the Termination Date to have occurred (in which case the Termination Date shall be deemed to have occurred); provided, that, upon the occurrence of any event (without any requirement for the giving of notice) described in subsection (f) or (k) of this Section 6.01, the Termination Date shall be deemed to have automatically have occurred. Notwithstanding the foregoing, if an Event of Termination shall have occurred as a result of a breach of Section 4.01(k) or Section 5.01(t) and such breach relates solely to the information prepared by a Sub-transfer Agent that constitutes an Unaffiliated Agent (the "Affected Sub-transfer Agent"), then (i) the Purchaser and the Program Agent, at the request of the Seller, hereby agree to negotiate in good faith to amend this Agreement, the Collection Agency Agreement and the Allocation Procedures to the extent necessary so as to permit the continued purchase of Receivables which do not relate to such Affected Sub-transfer Agent, and (ii) the Program Agent agrees that it shall not declare the Termination Date to have occurred as a result of any such breach if either (A) the amendments referred to in clause (i) above have been agreed upon by the Program Agent and the Seller within thirty (30) days after the Seller has knowledge of any such breach, or (B) the Seller shall have demonstrated to the reasonable satisfaction of the Program Agent (to be evidenced by written confirmation from the Program Agent), within thirty (30) days after the Seller has knowledge of any such breach, that the systems, procedures and/or reporting practices of the Affected Sub-transfer Agent have been modified so as to avoid further breaches relating to the information to be prepared by such Affected Sub-transfer Agent. 24 29 ARTICLE VII THE PROGRAM AGENT Section 7.01. Authorization and Action. The Purchaser hereby irrevocably appoints and authorizes the Program Agent to take such action as agent on its behalf and to exercise such powers under this Agreement, and the other Facility Documents as are delegated to the Program Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement or the other Facility Documents, the Program Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Purchaser; provided, however, that the Program Agent shall not be required to take any action which exposes the Program Agent to personal liability or which is contrary to this Agreement, the other Program Documents or Applicable Law. Section 7.02. Program Agent's Reliance, Etc. Neither the Program Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or any of the other Program Documents, except for its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Program Agent: (i) may consult with legal counsel (including counsel for the Seller, the Distributor or the Advisor), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to the Purchaser and shall not be responsible to the Purchaser for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement or the other Program Documents; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Program Documents on the part of the Seller (as Servicer or otherwise), the Distributor or the Advisor or to inspect the property (including the books and records) of the Seller, the Distributor or the Advisor; (iv) shall not be responsible to the Purchaser for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the other Program Documents or any other instrument or document furnished pursuant hereto or thereto; and (v) shall incur no liability under or in respect of this Agreement or any other Program Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. Section 7.03. Indemnification. The Purchaser agrees to indemnify the Program Agent (to the extent not reimbursed by or on behalf of the Seller) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Program Agent in any way relating to or arising out of this Agreement or any other Program 25 30 Document or any action taken or omitted by the Program Agent under this Agreement or any other Program Document; provided, that the Purchaser shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of the Program Agent. Without limitation of the foregoing, the Purchaser agrees to reimburse the Program Agent promptly upon demand for any out-of-pocket expenses (including counsel fees) incurred by the Program Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) or legal advice in respect of rights or responsibilities under this Agreement or the other Program Documents, to the extent that the Program Agent is not reimbursed for such expenses by or on behalf of the Seller. Section 7.04. Rights of the Program Agent. The Seller hereby agrees that the Program Agent is hereby authorized to deliver an Allocation Notice to the Collection Agent (i) upon the occurrence of any Event of Termination (or event which with the passage of time or notice, or both, would constitute an Event of Termination) which relates to the Seller, the Distributor, the Advisor or any Significant Affiliate, or (ii) at any time that the Program Agent in its sole discretion believes that the event contemplated in Section 6.01(f) could occur in respect of the Seller, the Distributor, the Advisor or any of their Significant Affiliates. ARTICLE VIII Section 8.01. Undertakings; Payment of Damages. The Seller hereby irrevocably and unconditionally agrees for the benefit of (i) the Purchaser and the Program Agent, and (ii) in respect of the obligations of the Distributor, the Transfer Agent and the Advisor under the Facility Documents to cause the Distributor and the Transfer Agent to perform and punctually and completely carry out each and every covenant of the Distributor, the Advisor and the Transfer Agent under this Agreement, the Transfer Agreement, the Servicing Agreement and each other Facility Document in accordance with the terms thereof. Section 8.02. Agreement Not Affected. The Purchaser and the Program Agent may proceed to exercise any right or remedy which it might have pursuant to this Article VIII without regard to any actions or omissions of the Purchaser, the Program Agent or any other Person. The validity of this Article VIII shall not be affected by any action or inaction which may be taken under or in respect of any Program Document. The Purchaser and the Program Agent at its option may proceed in the first instance against the Seller to obtain a remedy under any Program Document in the amount and in the manner set forth in such Program Document, without being obliged to resort first to any claim or action against the Distributor, the Advisor or the Transfer Agent. 26 31 Section 8.03. Waiver of Notice; No Offset; No Subrogation. The Seller hereby waives any and all notices or demands to which it may otherwise be entitled in connection with the pursuit of any remedy hereunder, under any other Facility Document or, to the extent permitted under Applicable Law; provided, that this sentence shall not constitute a waiver on behalf of the Distributor, the Advisor or the Transfer Agent of any notice or demand to which the Distributor, the Advisor or the Transfer Agent is entitled under the Facility Documents. The obligations of the Seller under this Article VIII shall not be subject to any defense, counterclaim or right of offset which the Seller, the Distributor, the Advisor or any other Person has or may have against the Purchaser, the Program Agent or any other Person, whether in respect of this Agreement, any other Facility Document, any Purchased Receivables or otherwise, but nothing herein shall limit the right of the Seller to pursue any claim in a separate action. ARTICLE IX MISCELLANEOUS Section 9.01. No Waiver; Modifications in Writing. No failure or delay on the part of the Program Agent or the Purchaser exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Program Agent and the Purchaser, at law or in equity. No amendment, modification, supplement, termination or waiver of this Agreement shall be effective unless the same shall be in writing and signed by each of the parties hereto. Any waiver of any provision of this Agreement, and any consent to any departure by any party to this Agreement from the terms of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on any party to this Agreement in any case shall entitle the Seller, the Advisor or the Distributor to any other or further notice or demand in similar or other circumstances. Section 9.02. Payment. Unless otherwise provided herein, whenever any payment to be made hereunder shall be due on a non-Business Day, such payment shall be made on the next succeeding Business Day. All amounts owing and payable by the Seller, the Advisor or the Distributor to the Purchaser or the Program Agent under this Agreement shall be paid in immediately available funds without counterclaim, setoff, deduction, defense, abatement, suspension or deferment, but nothing herein shall limit the right of the Seller, the Advisor or the Distributor to pursue any claim in a separate action. Each of the Seller, the Advisor and the Distributor hereby agrees to pay interest on any amounts payable by it under this Agreement, which shall not be paid in full when due, for the period commencing on the due date thereof until, but not including, the date the same is paid in full at the Post-Default Rate. For purposes of calculating the Post-Default Rate Interest, any amount received by or on behalf of the Purchaser or the Program Agent after 27 32 3:00 p.m. (New York City time) shall be deemed to have been received on the next succeeding Business Day. Section 9.03. Notices, Etc. (a) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered, certified or express mail, postage prepaid, or by prepaid telegram (with messenger delivery specified in the case of a telegram), or by telecopier, or by prepaid courier service. Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 9.03, notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) indicated below: If to the Purchaser: Citibank, N.A. c/o Citicorp North America, Inc. 399 Park Avenue, 6th Floor, Zone 2 New York, New York 10043 Attention: Mr. Joseph Diamente, B Share Servicing Telephone No.: (212) 559-1720 Facsimile No.: (212) 793-5233 If to the Program Agent: Citicorp North America, Inc. U.S. Securitization 399 Park Avenue 6th Floor, Zone 2 New York, New York 10043 Attention: Mr. Joseph Diamente, B Share Servicing Telephone No.: (212) 559-1720 Facsimile No.: (212) 793-5233 If to the Seller: A I M MANAGEMENT GROUP INC. 11 Greenway Plaza Suite 100 Houston, Texas 77046 Attention: Controller Telephone No.: (713) 626-1919 Facsimile No.: (713) 871-9348 28 33 With a copy to: 11 Greenway Plaza Suite 100 Houston, Texas 77046 Attention: General Counsel Telephone No.: (713) 626-1919 Facsimile No.: (713) 993-9185 If to the Distributor: A I M Distributors Inc. 11 Greenway Plaza Suite 100 Houston, Texas 77046 Attention: General Counsel Telephone No.: (713) 626-1919 Facsimile No.: (713) 993-9185 With a copy to: A I M Distributors Inc. 11 Greenway Plaza Suite 100 Houston, Texas 77046 Attention: Controller Telephone No.: (713) 626-1919 Facsimile No.: (713) 871-9348 If to the Advisor: A I M Advisors, Inc. 11 Greenway Plaza Suite 100 Houston, TX 77046 Attention: Controller Telephone No.: (713) 626-1919 Facsimile No.: (713) 871-9348 With a copy to: 11 Greenway Plaza Suite 100 Houston, TX 77046 Attention: Controller Telephone No.: (713) 626-1919 Facsimile No.: (713) 871-9348 (b) All notices, demands, consents, requests and other communications to be sent or delivered hereunder shall be deemed to be given or become effective for all purposes of this Agreement as follows: (a) when delivered in person, when given; (b) when sent by mail, when received by the Person to whom it is given, unless it is mailed by registered, certified or 29 34 express mail, in which case it shall be deemed given or effective on the earlier of the date of receipt or refusal; and (c) when sent by telegram, telecopy or other form of rapid transmission shall be deemed to be given or effective when receipt of such transmission is acknowledged. Section 9.04. Costs and Expenses; Indemnification. (a) Regardless of whether or not any of the transactions contemplated hereby are actually consummated, the Seller agrees to promptly pay on demand (i) all reasonable costs and expenses in connection with the administration and any modification, amendment and waiver of this Agreement, the Transfer Agreement, the Servicing Agreement and the other Facility Documents, provided, however, that the Program Agent agrees to pay the reasonable costs associated with any amendment or modification of the Facility Documents, if such amendment or modification is made upon the request of the Program Agent, unless such amendment or modification is required or is requested as a result of a breach by, or by a change in circumstances relating to, the Seller, the Distributor, the Advisor, any Transfer Agent, any Sub-transfer Agent, any Company or any Fund or as a result of any Event of Termination (or event which with the giving of notice or the lapse of time, or both, would constitute an Event of Termination), (ii) all costs and expenses incurred in connection with the enforcement of, or preservation of, any rights under this Agreement, the Transfer Agreement, the Servicing Agreement and the other Facility Documents, (iii) subject to Section 5.01(g), all actuarial fees, UCC filing fees and periodic auditing expenses in connection with the transactions contemplated by this Agreement, the Transfer Agreement, the Servicing Agreement and the other Facility Documents, and (iv) all reasonable fees and disbursements of counsel in connection with the foregoing. (b) Indemnification. The Seller agrees to indemnify and hold harmless the Purchaser (including without limitation any Transferee), the Program Agent, and each of their respective Affiliates and the respective officers, directors, employees, agents, advisors of, and any Person controlling any of, the foregoing (each, an "Indemnified Party") from and against any and all damages, losses, liabilities, expenses, obligations, penalties, actions, suits, judgments and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel) (collectively the "Liabilities") that are incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (and regardless of whether or not any such transactions are consummated) any of the transactions contemplated by the Facility Documents, including without limitation, any one or more of following: (i) the execution, delivery, enforcement, performance, administration of, or otherwise arising out of or incurred in connection with this Agreement, the Transfer Agreement, the Servicing Agreement, any Irrevocable Payment Instruction or any other Facility Document; (ii) preparation for a defense of, any investigation, litigation or proceeding arising out of this Agreement or any other Facility Documents or the transactions contemplated hereby or thereby ; provided, however, that the Seller's obligation under this Section 9.04(b)(ii) to indemnify any Indemnified Party in respect of any Liability described in this clause (ii) shall be limited, solely in respect of costs and expenses 30 35 incurred in the preparation of any such defense during the period prior to the date that any service of process (whether as a party, as a witness or otherwise) is made on such Indemnified Party (or any other Person with custody over the Purchased Receivables, the Collections or Proceeds thereof) in respect thereof, to $100,000 in respect of such costs and expenses of such Indemnified Party relating to any single investigation, litigation or proceeding and to $200,000 in respect of all such costs and expenses of such Indemnified Party, incurred during any twelve month period, relating to all to such investigations, litigations or proceedings; (iii) any failure or alleged (by Persons other than the Indemnified Party) failure by the Distributor, the Seller (as Servicer or otherwise) or the Advisor to perform any of its obligations, covenants, or agreement contained in any Facility Documents to which it is a party promptly and fully; (iv) any representation or warranty made or deemed made by the Distributor, the Seller (as Servicer or otherwise) or the Advisor, contained in this Agreement or any Facility Documents or in any certificate, written statement or report (including without limitation each Purchase Report, each Transfer Agent Report and each Sub-transfer Agent Report) delivered by or on behalf of any such Person in connection herewith or therewith is, or is alleged (by Persons other than the Indemnified Party) to have been false or misleading in any respect when made or any information (including without limitation any Sub-transfer Agent Report or any Transfer Agent Report) prepared or provided by the Seller, the Distributor, the Advisor, any of their Affiliates, any Sub-transfer Agent, Transfer Agent or by any other Person (including, without limitation, any Unaffiliated Agent) to the Purchaser or the Program Agent in writing for purposes of or in connection with any Facility Document shall fail to be true, correct and complete in all material respects on the date such information is stated or certified or any such information shall contain any material misrepresentation or any omission to state therein matters necessary to make the statements made therein not misleading in any material respect; (v) any failure by the Distributor, the Seller (as Servicer or otherwise) or the Advisor to comply promptly and fully with any Applicable Law or any contractual obligation binding upon it; (vi) any failure of any transfer of Receivables by the Distributor to the Seller under the Transfer Agreement or any failure of any transfer of Receivables by the Seller to the initial Purchaser under this Agreement to constitute a True Sale; (vii) any failure to vest in the Purchaser a first priority perfected ownership interest in the Purchased Receivables, the Ancillary Rights with respect thereto and the Collections related thereto free and clear of all Adverse Claims; (viii) any action or omission, not expressly required or contemplated to occur by the Facility Documents by the Distributor, the Seller (as Servicer or otherwise) or the Advisor, which has the effect of reducing or impairing the rights of the Purchaser or the Program Agent with respect to the Purchased Receivables and the Collections 31 36 related thereto or under any Facility Document or which otherwise gives rise to an Adverse Effect; (ix) any failure by the Distributor, the Seller (as Servicer or otherwise) or the Advisor, to make or cause to be made in the manner and when due any payment or deposit required to be paid by such party pursuant to any Facility Document; (x) any failure of any Distribution Plan, any Irrevocable Payment Instruction, any Underwriting Agreement or any other Facility Document to comply with any Applicable Law, unless such failure results from the failure of the Program Agent to, at the written request of the Seller (which written request shall specify that such amendment is required for such document to comply with Applicable Law), consent to an amendment to any such document which could not give rise to a reasonable possibility of an Adverse Effect and which is necessary in order for such document to comply with the Applicable Law; (xi) the execution, delivery, enforcement, performance, administration of, any Selling Agent's Agreement, the failure or alleged failure (by Persons other than the Indemnified Party) of any Selling Agent to perform its obligations under any Selling Agent's Agreement to which it is a party, any representation or warranty made by any Selling Agent is, or is alleged (by Persons other than the Indemnified Party) to have been false or misleading in any respect when made or deemed made, the failure of any Selling Agent to comply promptly and fully with Applicable Law, or any other action or omission by any Selling Agent not expressly required or contemplated to occur by the Program Documents; (xii) the failure of any condition precedent set forth in Article III of this Agreement to be fully satisfied; (xiii) any proceeding by or against the Distributor, the Seller (as Servicer or otherwise) or the Advisor seeking to adjudicate such Person, bankrupt or insolvent, or seeking liquidation, winding up, administration, reorganization, arrangement, adjustment, protection, relief, or composition of such Person or the debts of such Person under any Law relating to bankruptcy, insolvency, liquidation, administration, reorganization or relief of debtors or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian, administrator, liquidator, or other similar official for such Person or for a substantial part of such Person's property; (xiv) any change in Applicable Law after May 2, 1995 which causes any of the representations and warranties of the Distributor or the Seller (as Servicer or otherwise) set forth herein or in any Facility Document to no longer be true and correct as though such representation or warranty had been made on the date of such change in Applicable Law or which alters the obligations of the Distributor, the Seller (as Servicer or otherwise), the Advisor or any Company as set forth in the Facility Documents other than in each case (i) a change in Law applicable on an industry wide basis resulting in a Complete Termination of the Distribution Plan of any Fund, or (ii) a reduction in the Maximum Aggregate Sales Charge Allowable or in the annual limitation on the amount 32 37 payable by any Company in respect of the Sales Charge in respect of the Receivables relating to any Fund resulting solely from a change in Law applicable on an industry wide basis; (xv) the adoption by any Company or any Fund of a Liquidation Plan; (xvi) any amendment to the Prospectus in respect of a Fund in effect on the date hereof which changes the computation or timing of the CDSC or the rights of the Distributor in respect thereof; (xvii) Free Redemptions in excess of the Annual Redemption Threshold, it being understood that the amount payable in respect of this clause from and after the first day upon which the Annual Redemption Threshold has been met, shall be an amount equal to the CDSCs that would have been payable upon the redemption of each Share relating to a Purchased Receivable had each such excess redemption not constituted a Free Redemption and shall be paid in arrears on each Monthly Settlement Date); (xviii) any Adverse Claim in respect of the Receivables or the Collections; and (xix) the Seller's Class A and C CDSC Portion being remitted to the Demand Deposit Account or the Collection Account, including without limitation, the Seller's failure to properly identify such amounts. provided, however, that the Seller shall not be required to indemnify any Indemnified Party in respect of any Liability to the extent such Liability: (I) is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted directly and primarily from one or more of the following (A) such Indemnified Party's gross negligence or willful misconduct, or (B) the Purchased Receivables proving to be uncollectible, except to the extent that such uncollectibility is attributable to what would not have occurred but for any one or more of the events described in clauses (i) through (xix); (II) constitutes a liability arising out of a Take-out Transaction, except to the extent such Liability is attributable to or would not have occurred but for any one or more of the events described in clauses (i) through (xix) above; or (III) constitutes consequential damages, it being understood that the limitation set forth in clause (III) of this Section 9.04(b) is not intended to preclude any Transferee from being the beneficiary of, or from having the same rights to indemnification under this Section 9.04(b) that such Transferee would have as Purchaser if it were the signatory to this Agreement and the other Facility Documents to which the Purchaser is a party. (c) Without prejudice to the survival of any other agreement of the Seller hereunder, the agreement and obligations of the Seller contained in this Section 9.04 shall survive the termination of this Agreement. Section 9.05. Taxes. (a) Any and all payments by the Distributor, the Seller, the Advisor, the Transfer Agent or any Company under this Agreement, the Transfer Agreement, the Purchase Agreement, any Irrevocable Payment Instruction or any other Facility Document shall be made 33 38 free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, taxes imposed on the recipient's income, and franchise taxes imposed on the recipient, by (i) the United States federal government, (ii) the jurisdiction under the laws of which the recipient is organized or any political subdivision thereof, (iii) by the jurisdiction in which is located the principal executive office of the recipient or any political subdivision thereof or (iv) by any other jurisdiction which asserts the authority to impose such tax on the basis of contacts the recipient maintains with such jurisdiction other than the contacts arising out of the transactions contemplated hereby (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Distributor, the Seller, the Advisor, the Transfer Agent or any Company shall be required by Law to deduct any Taxes from or in respect of any sum payable hereunder or under any other Facility Document, (i) the sum payable hereunder or thereunder shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 9.05) the recipient receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Distributor, the Seller, the Advisor, the Transfer Agent or any Company shall make such deductions and (iii) the Seller shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with Applicable Law. (b) In addition, the Seller agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any transfer of Receivables in connection herewith or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the Transfer Agreement or any other Facility Document other than any such Tax imposed in respect of a Take-out Transaction (hereinafter referred to as "Other Taxes"). (c) The Seller will indemnify the Program Agent and the Purchaser for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 9.05) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted, so long as there is a reasonable basis for the assertion of such Taxes or Other Taxes. This indemnification shall be made within 30 days from the date the Program Agent or the Purchaser makes written demand therefor to the Seller. (d) Within thirty (30) days after the date of any payment of Taxes, the Seller will furnish to the Purchaser and the Program Agent the original or a certified copy of a receipt evidencing payment thereof. (e) Unless the Seller, the Distributor or the Advisor, as the case may be, shall have assumed responsibility for contesting a Tax or Other Tax described in paragraph (c) of this Section 9.05 as provided in the next sentence, the Purchaser may, but shall have no obligation to contest, settle or compromise such Tax or Other Tax. The Seller, the Distributor or the Advisor, as the case may be, may pursue, at its sole cost and expense, such lawful rights as are available at law to contest any Tax or Other Tax asserted against the Purchaser or the Program Agent provided: (i) the Seller, the Distributor or the Advisor, as the case may be, has assumed responsibility for such contest and the Seller has conceded in writing its responsibility to 34 39 indemnify the Purchaser or the Program Agent, as the case may be, in accordance with this Section, for the full amount of such Tax or Other Tax; (ii) such contest is conducted in a manner which does not result in a Lien on the Receivables and if the manner of contest does not defer the obligation to pay the Tax or Other Tax, the Seller shall pay such Tax or Other Tax when due, subject to the right to recover such Tax or Other Tax if the contest is successful, (iii) to the extent not covered by Section 9.04(b), the Seller shall have provided to the Purchaser or the Program Agent, as the case may be, such undertakings as the Purchaser or the Program Agent, as the case may be, shall request, in form and substance satisfactory to the Purchaser, or the Program Agent, as the case may be, whereby the Seller agrees to hold the Purchaser or the Program Agent, as the case may be, harmless from any and all liabilities, costs and expenses which may arise as a consequence of such contest; (iv) the Seller shall have furnished the Purchaser or the Program Agent, as the case may be, with an opinion, in form and scope reasonably satisfactory to the Purchaser or the Program Agent, as the case may be, of counsel reasonably satisfactory to the Purchaser or the Program Agent, as the case may be, that there is a meritorious basis for such contest; (v) the contest of such Tax or Other Tax may be conducted in a manner which does not affect the liability of the Purchaser or the Program Agent, as the case may be, for any tax not indemnified by Seller; (vi) the contest of such Tax or Other Tax can be separated from any contest of any other tax in respect of which the Seller has not indemnified Purchaser or the Program Agent, as the case may be, without prejudicing the Purchaser's or the Program Agent's, as the case may be, ability to deal with or otherwise contest such other liability; and (vii) the Purchaser or the Program Agent, as the case may be, has not waived its right to indemnification by the Seller in respect of such Tax or Other Tax. The Seller shall keep the Purchaser or the Program Agent, as the case may be, fully advised on a current basis concerning any such contest, and, without limiting the foregoing: (a) the Seller shall give the Purchaser or the Program Agent, as the case may be, reasonable notice of and a reasonable opportunity to be present in person or by counsel at any proceeding in connection therewith; (b) the Seller shall give the Purchaser or the Program Agent, as the case may be, notice of any proposed filings or papers to be served or filed by the Seller in connection with any such proceedings and a reasonable opportunity to comment upon them; and (c) the Seller shall promptly supply the Purchaser or the Program Agent, as the case may be, with copies of any filings or papers served upon the Seller in connection with such proceedings; it being understood that the Purchaser or the Program Agent, as the case may be, shall bear its own costs incurred in connection with any participation by the Purchaser or the Program Agent, as the case may be, or its counsel in the contest as contemplated by this sentence. (f) In the event the Seller shall pay a Tax or Other Tax pursuant to this Section 9.05 and all or a portion of such Tax or Other Tax previously paid by Seller is later refunded by the applicable Taxing Authority the recipient of such refund shall pay to the Seller the portion of such refund which relates to the amount previously paid by the Seller. (g) Without prejudice to the survival of any other agreement of the Seller hereunder, the agreements and obligations of the Seller contained in this Section 9.05 shall survive the termination of this Agreement. 35 40 Section 9.06. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. Section 9.07. Binding Effect; Assignment. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. Except as a result of a Permitted Change in Control relating to the Seller, the Advisor or the Distributor, neither the Seller nor the Distributor shall assign its rights or obligations hereunder or in connection herewith or any interest herein (voluntarily, or by operation of law or otherwise) without the Program Agent's and the Purchaser's prior written consent. This Agreement and the Program Agent's and the Purchaser's rights herein (including without limitation in respect of the Purchased Receivables, the Collections and the Ancillary Rights with respect thereto) shall be assignable, in whole or in part, by the Purchaser and the Program Agent and their respective successors and assigns; provided, however, that in connection with any proposed Take-out Transaction, prior to distributing to potential investors any offering materials which contain information describing the Seller, the Advisor, the Distributor or any of their respective Affiliates, the Program Agent shall give the Seller a reasonable opportunity to review and comment upon such portion of such materials. Unless the Purchaser reasonably determines that disclosure is required in order to comply with Law applicable to such Take-out Transaction, the Purchaser shall not make any disclosure which the Seller reasonably identifies in its comments pursuant to the preceding sentence as material, non-public information concerning the Seller or any of its Affiliates, the release of which would have a material adverse consequence to the Seller or any of its Affiliates (the "Prohibited Financial Information"); provided, however, that in connection with the initial offering of any securities in a Take-out Transaction involving any Purchased Receivables, the Purchaser shall not make any disclosure which the Seller reasonably identifies as Prohibited Financial Information. Subject to Section 9.15, each of the Seller, the Advisor and the Distributor hereby consents to the Purchaser and the Program Agent entering into the Take-out Transactions. Section 9.08. Governing Law; Submission to Jurisdiction. (a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT REGARD TO ITS CONFLICTS OF LAWS PROVISIONS. (b) Each of the Seller, the Advisor and the Distributor hereby irrevocably submits itself to the non-exclusive jurisdiction of the courts of the State of New York and to the non-exclusive jurisdiction of any Federal Court of the United States located in the southern district of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Servicing Agreement, the Collection Agency Agreement or any of the transactions contemplated hereby or thereby. 36 41 Section 9.09. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. Section 9.10. Confidentiality. Unless otherwise required by Applicable Law, each of the Seller, the Advisor and the Distributor agrees to use commercially reasonable efforts to maintain the confidentiality of the Facility Documents (and all drafts hereof and thereof) and the transactions contemplated thereby other than the Transfer Agent's Agreement, the Underwriting Agreements, the Advisory Agreements, the Distribution Plan and the Prospectuses in communications with third parties and otherwise; provided, that such documents and the transactions contemplated thereby may be disclosed (i) to third parties to the extent such disclosure is consented to in writing by the Program Agent (which consent shall not be unreasonably withheld) and such disclosure is made pursuant to a written confidentiality agreement in form and substance substantially identical to this Section 9.10, and (ii) the officers, partners, directors and employees, legal counsel and auditors of the Seller, the Advisor and the Distributor. Section 9.11. Intent of Agreement. It is the intention of this Agreement that each purchase of Receivables hereunder and the Ancillary Rights with respect thereto shall convey to the Purchaser an undivided 100% ownership interest in such Purchased Receivables, the Collections in respect thereto and the Ancillary Rights with respect thereto on the Purchase Date therefor and that such transactions shall constitute a True Sale and not a secured loan. If, notwithstanding such intention, any conveyance of Receivables and the Collections and the Ancillary Rights with respect thereto from the Seller to the Purchaser shall ever be recharacterized as a secured loan and not a sale, it is the intention of this Agreement that this Agreement shall constitute a security agreement under Applicable Law, and that the Seller shall be deemed to have granted to the Purchaser a duly perfected first priority security interest in all of the Seller's right, title and interest in, to and under such Purchased Receivables, the Collections and the Ancillary Rights in respect thereto free and clear of any Adverse Claim. Section 9.12. Liability to any Company. No obligation or liability to any Company, the Seller, the Advisor, the Distributor, any shareholder of any Fund or any Person contracting with or related to any Company is intended to be assumed by the Program Agent or the Purchaser under or as a result of this Agreement or the other Program Documents and the transactions contemplated hereby and thereby and, to the maximum extent permitted under provisions of Law, the Program Agent and the Purchaser expressly disclaim any such assumption. The Seller shall indemnify, defend and hold harmless the Program Agent and the Purchaser from any loss, liability or expense incurred as a result of any claim that any such obligation or liability has been so assumed. 37 42 Section 9.13. Merger. The Facility Documents taken as a whole incorporate the entire agreement between the parties thereto concerning the subject matter thereof. The Facility Documents supersede any prior agreements among the parties relating to the subject matter thereof. Section 9.14. Further Acts. Each party agrees that at any time, and from time to time, it will do all such things and execute and deliver all such instruments, assignments, other documents and assurances, as such other party or its counsel reasonably deems necessary or desirable in order to carry out the express intent, purpose and conditions of this Agreement and the other Facility Documents and the transactions contemplated hereby and thereby, and without limiting the generality of the foregoing, to the extent permitted by Applicable Law, upon the Program Agent's or the Purchaser's written request from time to time, each of the Seller, the Advisor and the Distributor shall make, execute, acknowledge and deliver and file and record in the proper filing and recording places all such instruments, and take all such actions, as the Program Agent or the Purchaser may reasonably deem necessary or advisable for assuring or confirming to the Purchaser its rights and interest in and to, and remedies in respect of, the Purchased Receivables, the Ancillary Rights and the Collections related thereto. Section 9.15. Assignee Rights; Etc. (a) Each of the Seller, the Advisor and the Distributor acknowledges and agrees that any Person which purchases or otherwise acquires any interest in any Purchased Receivables or the Ancillary Rights in respect thereof (or the right to receive any Collections with respect thereto) in a Take-out Transaction (each such Person, a "Transferee"), (and in the case of indemnities, their respective Affiliates and their officers, directors, employees and agents) shall each, to the extent of such Transferee's interest, be a beneficiary of the representations, warranties, indemnities, covenants, agreements and undertakings of the Seller, the Advisor and the Distributor under this Agreement and the other Facility Documents to which it is a party; provided, that such rights of the Transferees in a Take-out Transaction may be enforced on behalf of such Transferees only by the Master Servicer for the related Master Trust. Each of the Seller, the Advisor and the Distributor agree to execute and deliver such instruments and documents and shall take all such actions as the Program Agent, the Purchaser or any Master Trust shall reasonably deem necessary in order to permit the Purchaser to convey any portion of its right, title and interest in, to or under the Purchased Receivables or the Ancillary Rights and Collections in respect thereof to any Transferee and to confer upon any such Transferee the rights and privileges in and to the Purchased Receivables and the Ancillary Rights in respect thereof to which such Transferee has an interest and under the Facility Documents to the extent of such transfer and assignment. Notwithstanding anything in this Section 9.15 to the contrary, no Transferee shall be deemed to have assumed any of the obligations or liabilities of the Seller or the Distributor under this Agreement or any other Program Document. No such transfer to a Transferee shall alter the obligations of the Seller, the Advisor or the Distributor hereunder. (b) Subject to the other requirements set forth in Section 9.07, the Program Agent agrees that any written offering memorandum or circular used in connection with any 38 43 Take-out Transaction involving Purchased Receivables which contains information concerning the Seller or the Distributor shall (i) incorporate language substantially in the form of Schedule VI hereto, and (ii) provide that the securities which are the subject of such Take-out Transaction will be offered only to institutional accredited investors (as defined in Rule 501(a) under the Securities Act), to a qualified institutional buyer within the meaning of Rule 144A under the Securities Act and/or to any Person in a transaction exempt from registration under the Securities Act. The Program Agent also agrees that each Take-out Transaction involving Purchased Receivables shall be structured in a manner so that the securities which are the subject of such Take-out Transaction are to be offered and sold in a transaction exempt from registration under the Securities Act. Each of the Seller, the Advisor and the Distributor acknowledges that under the documentation to be entered into in connection with Take-out Transactions involving the Purchased Receivables (the "Take-out Documents") the holders of the securities issued in connection with such Take-out Transaction may have the right to consent to the Purchaser and the Program Agent taking certain actions and consenting to certain amendments, modifications or waivers under the Program Documents (collectively, the "Actions"). The Program Agent agrees that without the prior written consent of the Seller (which consent shall not be unreasonably withheld or delayed) the Take-out Documents relating to any Take-out Transaction shall not provide that more than the holders which in the aggregate have a 51% interest in the securities of each class issued in connection with such Take-out Transaction (the "Holders") be required to consent to the Purchaser or the Program Agent taking any Action; provided, however, that with respect to any Action which could affect the amount or timing of Collections relating to Purchased Receivables or which amend or modify the Allocation Procedures, the Take-out Documents may provide that the consent of the holders which in the aggregate have a 66-2/3% interest in the securities of any class issued in connection with such Take-out Transaction be required for the Purchaser or the Program Agent to take any such Action; provided, further, that no Holders (other than Citibank and Citicorp North America, Inc.) will be entitled to require that the Program Agent declare the Termination Date to have occurred following any Event of Termination. Section 9.16. Specific Performance; Other Rights and Remedies. The parties hereto recognize that certain of their rights under this Agreement and the other Facility Documents are unique and, accordingly, the parties hereto shall, in addition to such other remedies as may be available to any of them at law or in equity or under this Agreement and the other Facility Documents, have the right to enforce their rights hereunder and thereunder by actions for injunctive permitted relief and specific performance to the extent permitted by Applicable Law. The rights and remedies of the Program Agent and the Purchaser under this Agreement and the other Facility Documents are cumulative and are not in lieu of, but are in addition to, any other rights and remedies which the Program Agent and the Purchaser may have under or by virtue of any Applicable Law, or in equity, or any other agreement or obligations to which the Program Agent and the Purchaser is a party. The rights and remedies of the Program Agent and the Purchaser under this Agreement and the other Facility Documents may be exercised from time to time and as often as such exercise is deemed expedient. Without limiting the generality of the foregoing, each of the Seller, the Advisor and the Distributor acknowledges and agrees that it will be impossible to measure in money the damage to the 39 44 Program Agent or the Purchaser in the event of a breach of any of the terms and provisions of this Agreement or any other Program Document, and that, in the event of any such breach, the Program Agent and the Purchaser may not have an adequate remedy at Law, although the foregoing shall not constitute a waiver of any of the Program Agent's or the Purchaser's rights, powers, privileges and remedies against or in respect of a breaching party, any collateral or any other Person or thing under this Agreement, any other Facility Document or Applicable Law. It is therefore agreed that each of the Program Agent and the Purchaser, in addition to all other such rights, powers, privileges and remedies that it may have, shall be entitled to injunctive relief, specific performance or such other equitable relief as it may request to exercise or otherwise enforce any of the terms of those provisions and to enjoin or otherwise restrain any act prohibited thereby, and each of the Seller, the Advisor and the Distributor agree that it shall not argue and hereby waives any defense that there is an adequate remedy available at Law. 40 45 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. CITIBANK, N.A. By: /s/ JEAN M. DIAZ ---------------------------------- Name: Jean M. Diaz Title: Vice President CITICORP NORTH AMERICA, INC., as Program Agent By: /s/ JEAN M. DIAZ ---------------------------------- Name: Jean M. Diaz Title: Vice President A I M MANAGEMENT GROUP INC., as Seller By: /s/ ROBERT H. GRAHAM ---------------------------------- Name: Title: A I M DISTRIBUTORS, INC., as Distributor By: /s/ MICHAEL J. CEMO ---------------------------------- Name: Title: A I M ADVISORS, INC., as Advisor By: /s/ ROBERT H. GRAHAM ---------------------------------- Name: Title: EX-4.19 10 h86436ex4-19.txt FIRST SUPPLEMENTAL INDENTURE - INVESCO, INC. 1 EXHIBIT 4.19 FIRST SUPPLEMENTAL INDENTURE THIS FIRST SUPPLEMENTAL INDENTURE dated as of December 31, 1999 is by and among CITIBANK, N.A., a national banking association having its principal corporate trust office at 120 Wall Street, New York, New York (herein, together with its successors in trust, the "Trustee"), LGT BANK IN LIECHTENSTEIN AKTIENGESELLSCHAFT, a bank organized under the laws of Liechtenstein (the "Guarantor") and INVESCO, INC., a Delaware corporation, the "Successor Company"), and the successor by merger with INVESCO (NY) Asset Management, Inc., f/k/a LGT Asset Management, Inc., and the "Company" under the Indenture referred to below (the "Existing Issuer"). NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the Trustee, the Guarantor and the Successor Company hereby agree as follows: PRELIMINARY STATEMENTS The Trustee, the Existing Issuer and the Guarantor are parties to that certain Indenture dated as of December 16, 1996 (the "Indenture") pursuant to which the Existing Issuer issued U.S.$150,000,000 of its 6.875% Senior Notes due 2006 and U.S.$100,000,000 of its 6.50% Senior Notes due 2001. As permitted by the terms of the Indenture, the Existing Issuer has, simultaneously with the effectiveness of this First Supplement, merged (referred to herein as the "Transaction" and the Transaction for purposes of Section 8.1 of the Indenture) with and into the Successor Company where the Successor Company is the surviving corporation. The parties hereto are entering into this First Supplemental Indenture pursuant to, and in accordance with, Section 8.1 of the Indenture. SECTION 1. DEFINITIONS. All capitalized terms used herein which are defined in the Indenture, either directly or by reference therein, shall have the respective meanings assigned them in the Indenture except as otherwise provided herein or unless the context otherwise requires. SECTION 2. INTERPRETATION. (a) In this Supplemental Indenture, unless a clear contrary intention appears: (i) the singular number includes the plural number and vice versa; (ii) reference to any gender includes each other gender; 2 (iii) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Supplemental Indenture as a whole and not to any particular Section or other subdivision; (iv) reference to any Person includes such Persons' successors and assigns but, if applicable, only if such successors and assigns are permitted by this Supplemental Indenture or an Operative Document, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually provided that nothing in this clause (iv) is intended to authorize any assignment not otherwise permitted by this Supplemental Indenture or such Operative Document; (v) reference to any agreement, document or instrument means such agreement, document or instrument as amended, supplemented or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof, as well as any substitution or replacement therefor and reference to any note includes modifications thereof and any note issued in extension or renewal thereof or in substitution or replacement therefor; (vi) reference to any Section means such Section of this Supplemental Indenture; and (vii) the word "including" (and with correlative meaning "include") means including without limiting the generality of any description preceding such term. (b) No provision in this Supplemental Indenture shall be interpreted or construed against any Person because that Person or its legal representative drafted such provision. SECTION 3. ASSUMPTION OF OBLIGATIONS. (a) Pursuant to, and in compliance and accordance with, Section 8.1 of the Indenture, the Successor Company hereby expressly and unconditionally assumes the due and punctual payment of the principal of, and interest on, and any Additional Amounts with respect to, all of the Securities and the performance of each and every covenant of the Company under the Indenture, all as if the Successor Company were the Company thereunder. (b) By executing the First Supplemental Indenture, the Guarantor consents to the Transaction and the supplementing of the Indenture pursuant hereto and acknowledges, ratifies and confirms that its guarantee obligations pursuant to Article XIII of the Indenture (and pursuant to each Guarantee attached to any Security) continue to remain in full force and effect without discharge or modification in any way by reason of -2- 3 the Transaction and the assumption of obligations by the Successor effected pursuant to paragraph (a) above. (c) Pursuant to Section 8.2 of the Indenture, the Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture with the same effect as if the Successor Company had originally been the Company under the Indenture. SECTION 4. REPRESENTATIONS AND WARRANTIES. The Successor Company represents and warrants that (a) it has all necessary power and authority to execute and deliver this Supplemental Indenture and to perform the Indenture, (b) that it is the successor by merger of the Existing Issuer pursuant to a valid merger effected in accordance with applicable law, (c) that it is a corporation organized and existing under the laws of the State of Delaware, (d) that, both immediately before and after giving effect to this First Supplemental Indenture, no Default or Event of Default has occurred and is continuing, and (e) that this First Supplemental Indenture is executed and delivered pursuant to Section 9.1(1) of the Indenture and does not require the consent of the Holders. SECTION 5. CONDITIONS OF EFFECTIVENESS. This First Supplemental Indenture shall become effective when, and only when: (a) the Trustee shall have executed a counterpart of this First Supplemental Indenture and shall have received a counterpart of this First Supplemental Indenture executed by the Successor Company and the Guarantor; (b) The Trustee shall have received an Officers' Certificate stating that the Transaction and this First Supplemental Indenture comply with Article VIII of the Indenture; and (c) the Trustee shall have received and Opinion of Counsel, in form and substance satisfactory to it, to the effect that the Transaction and the execution and delivery of this First Supplemental Indenture is permitted by and is effected in compliance with the Indenture. SECTION 6. REFERENCE TO THE INDENTURE. (a) Upon the effectiveness of this First Supplemental Indenture, each reference in the Indenture to "this Indenture," "hereunder," "herein" or words of like import shall mean and be a reference to the Indenture, as affected, amended and supplemented hereby. (b) Upon the effectiveness of this First Supplemental Indenture, each reference in the Securities to the Indenture including each term defined by reference to the Indenture shall mean and be a reference to the Indenture or such term, as the case may be, as affected, amended and supplemented hereby. -3- 4 (c) The Indenture, as amended and supplemented by the amendment and supplement referred to above, shall remain in full force and effect and is hereby ratified and confirmed. SECTION 7. EXECUTION IN COUNTERPARTS. This First Supplemental Indenture may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. SECTION 8. GOVERNING LAW; BINDING EFFECT. This First Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York and shall be binding upon the parties hereto and their respective successors and assigns. SECTION 9. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or the due execution thereof by the Company. The recitals of fact contained herein shall be taken as the statements solely of the Company, and the Trustee assumes no responsibility for the correctness thereof. [SIGNATURES BEGIN ON FOLLOWING PAGE] -4- 5 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be executed and effective as of the date first stated herein, by their respective offices thereunto duly authorized. THE SUCCESSOR COMPANY: INVESCO, INC., a Delaware corporation By: /s/ DAVID A. HARTLEY ---------------------------------------- Name: David A. Hartley ----------------------------------- Title: Chief Financial Officer INVESCO, Inc. (and successor to INVESCO (NY) Asset Management, Inc. (f/k/a LGT Asset Management, Inc.)) ------------------------------------ By: /s/ LUIS A. AGUILAR ---------------------------------------- Name: Luis A. Aguilar ----------------------------------- Title: Vice President, Secretary and General Counsel INVESCO, Inc. (and successor to INVESCO (NY) Asset Management, Inc. (f/k/a LGT Asset Management, Inc.)) ----------------------------------- THE GUARANTOR: LGT BANK IN LIECHTENSTEIN AKTIENGESELLSCHAFT By: /s/ PATRICK LENGWILER ------------------------------- Name: Patrick Lengwiler -------------------------- Title: Legal Counsel ------------------------ By: /s/ ELMAR MATTLE ------------------------------- Name: Elmar Mattle -------------------------- Title: Chief Officer ------------------------ THE TRUSTEE: CITIBANK, N.A. By: /s/ WAFAA ORFY ------------------------------- Name: Wafaa Orfy -------------------------- Title: Assistant Vice President ------------------------ -5- EX-4.22 11 h86436ex4-22.txt AMVESCAP DEFERRED FEES SHARE PLAN 1 EXHIBIT 4.22 Amvescap plc RULES OF THE AMVESCAP DEFERRED FEES SHARE PLAN Adopted by the Board on o 1999 ASHURST MORRIS CRISP Broadwalk House 5 Appold Street London EC2A 2HA Tel: 0171 638 1111 Fax: 0171 972 9770 (ref PNR) 2 THE AMVESCAP DEFERRED FEES SHARE PLAN 1. DEFINITIONS The following words and expressions shall have the following meanings:- "Board" the board of directors of the Company or a duly authorised committee thereof; "Commencement Date" o 1999; "Company" Amvescap plc; "Control" except where otherwise expressly stated, control within the meaning of Section 840 of the Income and Corporation Taxes Act 1988; "Deferral Notice" a notice in writing from a Director to the Company, in the form annexed to these Rules, or in such other form as the Board may from time to time determine, relating to the Fees of a Fee Period commencing no less than one calendar month after the date of receipt of such notice by the Company; "Deferred Proportion" that proportion of any Director's Fees as shall have been the subject of a Deferral Notice; "Director" on any day on or after the Commencement Date, an individual who is a director of the Company; "Fee Period" the period 1 July 1999 to 31 December 1999, and thereafter any year ending 31 December, or such other period as the Board may from time to time determine; "Fees" fees for performing services in the capacity only of a Director; "Participant" any Director who shall have submitted a Deferral Notice; "Plan" the Amvescap Deferred Fees Share Plan constituted by the Rules; "Rules" these Rules as from time to time amended; "Share" a fully paid ordinary share in the capital of the Company; "Taxes" all forms of taxation whether of the United Kingdom or elsewhere wheresoever and whensoever imposed, (including, without limitation, income tax, inheritance tax and national insurance contributions) and all other statutory, governmental, state, provincial, local governmental or municipal impositions, duties, rates and levied and all penalties, charges, costs and interest relating to any such matters. 2. PURPOSE -1- 3 These Rules constitute the Amvescap Deferred Fees Share Plan. 3. DEFERRAL OF FEES 3.1 A Director may, at any time and from time to time, deliver a Deferral Notice to the Company. 3.2 The Deferral Notice shall identify the Fee Period or Fee Periods (or shall be stated to operate in respect of an indefinite number of Fee Periods), and the proportion of the Director's fees for that Fee Period or those Fee Periods, to which it relates. 3.3 The effect of a Deferral Notice shall be to vary the terms on which a Director is paid Fees for the relevant Fee Period or Fee Periods to which the Deferral Notice relates. 3.4 No Deferral Notice may be varied or withdrawn by a Director in relation to any Fee Period to which it relates less than one calendar month prior to the commencement of that Fee Period other than with the agreement of the Board. 3.5 No Deferral Notice may be varied or withdrawn in respect of any Fee Period which shall have commenced. 3.6 The Company shall acknowledge receipt of a Deferral Notice and shall determine prior to the commencement of any Fee Period to which the Deferral Notice relates whether the Fees deferred shall be provided for only by crediting the same to a deferred fees account (an "Unfunded Deferral") or an amount equal to the Fees deferred shall be paid to a nominee, trustee or other custodian pending payment in accordance with the terms of the Deferral Notice (a "Funded Deferral"). 3.7 All Fees the subject of a Deferral Notice delivered by a Director who is a United States taxpayer shall only be the subject of an Unfunded Deferral. 3.8 The aggregate amount of Fees payable to all Directors in any financial year of the Company, whether or not all or any of such Fees shall have been the subject of a Deferral Notice in any prior year, shall not exceed the limit set out from time to time in the articles of association of the Company. 4. ASSIGNMENT No aspect of participation in the Plan may be assigned, charged or otherwise disposed of by a Participant. 5. PAYMENT OF THE DEFERRED FEES 5.1 Subject to Rule 5.4, the Deferred Proportion (or the sum then representing the Deferred Proportion, if different) shall be paid to the Participant within ten working days of the date on which the Participant shall cease to be a Director. 5.2 Payment may be made either in cash or in such readily realisable assets as the Board and the Participant may agree, and in the absence of agreement at the discretion of the Board. 5.3 In any case in which the Company shall issue Shares to a Participant, such Shares shall be paid up by the application of the Fees the subject of the relevant Deferral Notice. -2- 4 5.4 In any year:- (a) Fees which shall not have been the subject of a Deferral Notice shall be paid before Fees which shall have been so subject; (b) Fees which shall have been the subject of an earlier Deferral Notice shall be paid before Fees which shall have been the subject of a later Deferral Notice; and, (c) to the extent that the payment, on any day, of Fees which shall have been the subject of a Deferral Notice would otherwise breach the limit in Rule 3.8 such Fees shall not be payable until they may be paid without giving rise to any such breach; and in the case of such Fees attributable to more than one Director the amount of such Fees shall be reduced pro-rata as between the Directors. 6. NOTICES Any notice which the Board or any Director or Participant is required or may desire to give pursuant to these Rules shall be in writing and sufficiently given if delivered personally or sent first class through the post prepaid addressed to the Company Secretary, the Director or the Participant, as the case may be, at the Company's registered office or the Director's or Participant's address last known to the Company respectively and if so sent by post shall be deemed to have been duly delivered notwithstanding that he be then deceased (and whether or not the Company has notice of his death) except where his personal representatives have established their title to the satisfaction of the Company and supplied to the Company an address to which documents are to be sent. 7. EMPLOYMENT RIGHTS 7.1 This Plan shall not form part of any contract of employment between the Company and any Director. 7.2 Participation in the Plan shall be on the express condition that:- (a) neither it nor cessation of participation shall afford any individual under the terms of his office with the Company any additional or other rights to compensation or damages; and (b) no damages or compensation shall be payable in consequence of the termination of such office or for any other reason whatsoever to compensate him for the loss of any rights the Participant would otherwise have had (actual or prospective) under the Plan howsoever arising but for such termination; and (c) the Participant shall be deemed irrevocably to have waived any such rights to which he may otherwise have been entitled. 7.3 No individual shall have any claim against the Company arising out of his not being admitted to participation in the Plan which (for the avoidance of doubt) is entirely within the discretion of the Board. 7.4 No Participant shall be entitled to claim compensation from the Company in respect of any Fees deferred by him pursuant to the Plan or for any diminution or extinction of his rights or benefits (actual or otherwise) in connection with the Plan and the Company shall be -3- 5 entirely free to conduct its affairs as it sees fit without regard to any consequences under, upon or in relation to the Plan or any Participant. 8. TAXATION The Company may make such provision for and take such action as may be considered by it to be necessary or expedient for the withholding or payment of any Taxes for it is properly accountable and whenever and wherever those Taxes are imposed provided those Taxes arise in respect of any payment or other benefit arising or deemed to arise to any Participant pursuant to these Rules including (but not limited to) (i) the withholding of funds or property (or any portion thereof) from any payment under these Rules or from any other payment to be made to the Participant or (ii) the cancellation of any such payment to the extent necessary to secure funds for the Company to discharge such Taxes for which it is properly accountable. 9. ADMINISTRATION AND AMENDMENT 9.1 The Plan shall be administered under the direction of the Board who may at any time and from time to time by resolution and without other formality amend or augment these Rules or the Plan PROVIDED THAT no amendment shall affect adversely any existing rights of Participants. 9.2 The Company shall bear the costs of setting up and administering the Plan. 9.3 The Company shall maintain for itself all necessary records relating to the Plan. 10. TERMINATION The Plan may be terminated at any time by a resolution of the Board but any termination shall not affect rights existing prior to such termination. 11. GOVERNING LAW The Plan shall be governed by and construed under English law. Any proceeding arising from or in connection with the Plan may be brought in any court of competent jurisdiction in England. -4- EX-4.23 12 h86436ex4-23.txt AMENDED MERGER AGREEMENT - TRIMARK 1 EXHIBIT 4.23 AMVESCAP PLC and TRIMARK FINANCIAL CORPORATION -------------------- AMENDED AND RESTATED MERGER AGREEMENT May 9, 2000 -------------------- 2 TABLE OF CONTENTS ARTICLE 1 INTERPRETATION Section 1.1 Definitions................................................................................1 Section 1.2 Interpretation Not Affected by Headings, etc..............................................10 Section 1.3 Currency..................................................................................10 Section 1.4 Number, etc...............................................................................10 Section 1.5 Date For Any Action.......................................................................11 Section 1.6 Entire Agreement..........................................................................11 Section 1.7 Schedules.................................................................................11 Section 1.8 Accounting Matters........................................................................11 Section 1.9 Knowledge.................................................................................11 ARTICLE 2 THE ARRANGEMENT Section 2.1 Implementation Steps by Trimark...........................................................12 Section 2.2 Implementation Steps by AMVESCAP..........................................................13 Section 2.3 Interim Order.............................................................................14 Section 2.4 Articles of Arrangement...................................................................15 Section 2.5 Trimark Circular..........................................................................15 Section 2.6 AMVESCAP Circular.........................................................................15 Section 2.7 Securities Compliance.....................................................................15 Section 2.8 Preparation of Filings, etc...............................................................16 Section 2.9 Holdco Alternative........................................................................18 ARTICLE 3 REPRESENTATIONS AND WARRANTIES Section 3.1 Representations and Warranties of Trimark.................................................18 Section 3.2 Representations and Warranties of AMVESCAP................................................18 Section 3.3 Survival..................................................................................18 ARTICLE 4 COVENANTS Section 4.1 Retention of Goodwill.....................................................................18 Section 4.2 Treatment of Options, etc.................................................................19 Section 4.3 Covenants of Trimark......................................................................20 Section 4.4 Covenants of AMVESCAP.....................................................................25 Section 4.5 Covenants Regarding Non-Solicitation......................................................28 Section 4.6 Notice by Trimark of Superior Proposal Determination......................................30 Section 4.7 Access to Information.....................................................................31
(i) 3 Section 4.8 Closing Matters...........................................................................32 Section 4.9 Indemnification...........................................................................32 ARTICLE 5 CONDITIONS Section 5.1 Mutual Conditions Precedent...............................................................32 Section 5.2 Additional Conditions Precedent to the Obligations of AMVESCAP............................34 Section 5.3 Additional Conditions Precedent to the Obligations of Trimark.............................35 Section 5.4 Notice and Cure Provisions................................................................36 Section 5.5 Satisfaction of Conditions................................................................37 ARTICLE 6 AMENDMENT AND TERMINATION Section 6.1 Amendment.................................................................................37 Section 6.2 Mutual Understanding Regarding Amendments.................................................38 Section 6.3 Termination...............................................................................38 Section 6.4 Break and Other Fees......................................................................40 Section 6.5 Effect of Break Fee Payment...............................................................41 Section 6.6 Remedies..................................................................................41 ARTICLE 7 GENERAL Section 7.1 Notices...................................................................................42 Section 7.2 Assignment................................................................................43 Section 7.3 Binding Effect............................................................................43 Section 7.4 Waiver and Modification...................................................................43 Section 7.5 Further Assurances........................................................................44 Section 7.6 Expenses..................................................................................44 Section 7.7 Consultation..............................................................................44 Section 7.8 Governing Laws............................................................................45 Section 7.9 Time of Essence...........................................................................45 Section 7.10 Counterparts..............................................................................45
(ii) 4 AMENDED AND RESTATED MERGER AGREEMENT MEMORANDUM OF AGREEMENT made as of the 9th day of May, 2000. BETWEEN : AMVESCAP PLC a corporation existing under the laws of England (hereinafter referred to as "AMVESCAP") - and - TRIMARK FINANCIAL CORPORATION a corporation existing under the laws of Ontario (hereinafter referred to as "TRIMARK") THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants and agreements herein contained, the parties hereto covenant and agree as follows: ARTICLE 1 INTERPRETATION SECTION 1.1 DEFINITIONS. In this Agreement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the following meanings respectively: "ACQUISITION PROPOSAL" means any proposal or offer with respect to any merger, amalgamation, arrangement, business combination, liquidation, dissolution, recapitalization, take-over bid, purchase of all or any material assets of, or any purchase of more than 20% of the equity (or rights thereto) of, or similar transactions involving, Trimark or any Trimark Material Subsidiary, excluding the Arrangement; "AFFILIATE" shall have the meaning ascribed thereto under the Securities Act; "AGENT" has the meaning ascribed to such term in Section 1.1 of the Plan of Arrangement; 5 -2- "AGGREGATE PRINCIPAL AMOUNT OF DEBENTURES" has the meaning ascribed thereto in Section 1.1 of the Plan of Arrangement; "AMVESCAP CIRCULAR" means the circular to be sent to the AMVESCAP Shareholders, including the notice of the AMVESCAP Meeting and all appendices thereto, containing information relating to the transactions contemplated herein together with accompanying listing particulars for the AMVESCAP Ordinary Shares to be issued pursuant to the Arrangement; "AMVESCAP EQUITY SUBORDINATED DEBENTURES" means the equity subordinated debentures of Exchangeco containing the terms ascribed thereto in Schedule F; "AMVESCAP MATERIAL SUBSIDIARY" means each subsidiary of AMVESCAP the total assets of which constituted more than ten percent of the consolidated assets of AMVESCAP or the total revenues of which constituted more than ten percent of the consolidated revenues of AMVESCAP, in each case as set out in the financial statements of AMVESCAP for the year ended December 31, 1999, and including each affiliate of AMVESCAP that directly or indirectly holds an equity interest in each such subsidiary; "AMVESCAP MEETING" means the extraordinary general meeting of AMVESCAP Shareholders, including any adjournment or postponement thereof, to be called and held in accordance with applicable Laws to consider certain matters in connection with the Arrangement; "AMVESCAP ORDINARY SHARES" means the ordinary shares in the capital of AMVESCAP; "AMVESCAP RESOLUTION" means the special resolution of the AMVESCAP Shareholders to implement the matters referred to in this Agreement including, to the extent required, the acquisition of Trimark Common Shares, the creation of the AMVESCAP Special Voting Share, the allotment of AMVESCAP Ordinary Shares to be issued at the Effective Time in connection with the Arrangement and the reservation of AMVESCAP Ordinary Shares for issuance from time to time: (i) upon the exchange of Exchangeable Shares; and (ii) upon the exercise of the Replacement Options; "AMVESCAP SHAREHOLDERS" means the holders of AMVESCAP Ordinary Shares; "AMVESCAP SPECIAL VOTING SHARE" has the meaning ascribed thereto in the Voting and Exchange Trust Agreement; 6 -3- "ARRANGEMENT" means an arrangement under Section 182 of the OBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with Section 6.1 or Article 6 of the Plan of Arrangement or made at the direction of the Court; "ARRANGEMENT RESOLUTION" means the special resolution of the Trimark Securityholders, to be substantially in the form and content of Schedule A annexed hereto; "ARTICLES OF ARRANGEMENT" means the articles of arrangement of Trimark in respect of the Arrangement that are required by the OBCA to be sent to the Director after the Final Order is made; "BUSINESS DAY" means any day on which commercial banks are generally open for business in Toronto, Ontario and London, England other than a Saturday, a Sunday or a day observed as a holiday in Toronto, Ontario under applicable laws or in London, England under applicable laws; "CALLCO" means a company to be incorporated by AMVESCAP under the laws of Canada or one of the Provinces of Canada which will be a direct or indirect wholly-owned subsidiary of AMVESCAP; "CANADIAN SECURITIES REGULATORY AUTHORITIES" means collectively, the securities commission or other securities regulatory authority in each of the provinces and territories of Canada, and "CANADIAN SECURITIES REGULATORY AUTHORITY" means any one of the foregoing. "CONFIDENTIALITY AGREEMENT" means the confidentiality letter agreement dated April 29, 2000 between AMVESCAP and Trimark; "COURT" means the Superior Court of Justice (Ontario); "DIRECTOR" means the Director appointed pursuant to Section 278 of the OBCA; "DISSENT RIGHTS" means the rights of dissent in respect of the Arrangement described in Section 3.1 of the Plan of Arrangement; "DISSENTING SHAREHOLDER" has the meaning ascribed thereto in the Plan of Arrangement; "EFFECTIVE DATE" means the date shown on the certificate of arrangement to be issued by the Director under the OBCA giving effect to the Arrangement; 7 -4- "EFFECTIVE TIME" has the meaning ascribed thereto in the Plan of Arrangement; "ELECTION DEADLINE" has the meaning ascribed to such term in Section 1.1 of the Plan of Arrangement; "EXCHANGE RATIO" has the meaning ascribed thereto in the Plan of Arrangement; "EXCHANGEABLE SHARES" means the non-voting exchangeable shares in the capital of Exchangeco, having the rights, privileges, restrictions and conditions set out in Appendix I to the Plan of Arrangement; "EXCHANGECO" means a corporation to be incorporated by AMVESCAP under the laws of Canada or one of the Provinces of Canada which will be a direct or indirect wholly-owned subsidiary of AMVESCAP and which will issue the Exchangeable Shares; "FINAL ORDER" means the final order of the Court approving the Arrangement as such order may be amended by the Court at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed; "FUNDS" means the mutual funds, investment funds and collective investment vehicles established, managed or distributed by Trimark or any of its affiliates, other than the Optima Strategy Canadian Diversified Pool and any other funds managed by Trimark for third parties, and "FUND" means any one of the foregoing; "GOVERNMENTAL ENTITY" means any (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) self-regulatory organization or stock exchange (including without limitation the LSE, the UKLA and the Toronto Stock Exchange), (c) any subdivision, agent, commission, board, or authority of any of the foregoing, or (d) any quasi- governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; "HOLDCO AGREEMENT" means an agreement satisfactory to AMVESCAP, in its sole discretion, pursuant to which all of the holders of shares in the capital of a Holding Company agree to, among other things, transfer all of the shares in the capital of such company to Exchangeco under the Arrangement and agree to deposit with the Agent prior to the Election Deadline a duly completed Holdco Letter of Transmittal and Election Form; 8 -5- "HOLDCO ALTERNATIVE" means the option of all of the holders of shares in the capital of a Holding Company to enter into a Holdco Agreement with AMVESCAP and to transfer all of the issued and outstanding shares in the capital of such company to Exchangeco under the Arrangement and to receive the consideration specified in the Plan of Arrangement; "HOLDCO LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of transmittal and election form for use by holders of Holdco Shares who choose the Holdco Alternative, which will provide, among other things, that the Holdco Alternative is available only in respect of a Holding Company that is a single-purpose holding company: (a) which is resident in Canada and a taxable Canadian corporation for purposes of the Tax Act, (b) which has no assets other than Trimark Shares and/or the shares of no more than one other Holding Company and no liabilities whatsoever, and (c) either (i) which is a newly incorporated corporation, or (ii) in respect of which AMVESCAP has had full access to all of the books and records by such date that is no later than 10 calendar days prior to the date of the Trimark Meeting and AMVESCAP is satisfied that the shareholders of such Holding Company are not able to utilize a newly incorporated corporation on a tax effective basis; "HOLDCO SHARES" means, in respect of a Holding Company, all of the issued and outstanding shares in the capital of such Holding Company; "HOLDERS" means, when used with reference to the Trimark Common Shares, the holders of Trimark Common Shares shown from time to time in the register maintained by or on behalf of Trimark in respect of the Trimark Common Shares and, when used with reference to the Exchangeable Shares or the AMVESCAP Equity Subordinated Debentures, means the holders of Exchangeable Shares or the AMVESCAP Equity Subordinated Debentures, respectively, shown from time to time in the register maintained by or on behalf of Exchangeco in respect of the Exchangeable Shares or the AMVESCAP Equity Subordinated Debentures, respectively; "HOLDING COMPANY" means a company which is a holder of shares in the capital of Trimark and in respect of which all of the holders of shares in the capital of such company have validly exercised the Holdco Alternative and duly completed and deposited with the Agent prior to the Election Deadline a Holdco Letter of Transmittal and Election Form; "INCLUDING" means including without limitation; "INFORMATION" has the meaning ascribed thereto in Section 4.7(2); 9 -6- "INTERIM ORDER" means the interim order of the Court, as the same may be amended, in respect of the Arrangement, as contemplated by Section 2.3; "LAWS" means all statutes, regulations, statutory rules, orders, and terms and conditions of any grant of approval, permission, authority or license of any court or Governmental Entity, and the term "applicable" with respect to such Laws and in the context that refers to one or more Persons, means that such Laws apply to such Person or Persons or its or their business, undertaking, property or securities and emanate from a Governmental Entity having jurisdiction over the Person or Persons or its or their business, undertaking, property or securities; "LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of transmittal and election form for use by holders of Trimark Common Shares, in the form accompanying the Trimark Circular; "LSE" means the London Stock Exchange Limited or its successors; "MATERIAL ADVERSE CHANGE", when used in connection with AMVESCAP or Trimark, means any change, effect, event or occurrence with respect to its condition (financial or otherwise), properties, assets, liabilities, obligations (whether absolute, accrued, conditional or otherwise), businesses, operations or results of operations or those of its subsidiaries that is, or could reasonably be expected to be, material and adverse to the business, operations or financial condition of such party and its subsidiaries taken as a whole other than any change, effect, event or occurrence (i) relating to the Canadian, United States or United Kingdom economy or securities markets in general, (ii) affecting the Canadian, United States or United Kingdom fund management industry in general and which does not have a materially disproportionate impact on such party, or (iii) relating to any change in the trading price of the AMVESCAP Ordinary Shares or the Trimark Common Shares, respectively, related to the Arrangement or unrelated to any change, effect, event or occurrence that is, or would reasonably be expected to be, material and adverse to the condition, operations or financial condition of such party and its subsidiaries taken as a whole. For greater certainty, Material Adverse Change in respect of Trimark shall be deemed to include, without limitation, the net redemption of securities of the Funds (calculated from the date hereof) having an aggregate value of at least 10% of the greater of: (A) the aggregate net asset value of all of the Funds as at March 31, 2000; and (B) the aggregate net asset value of all of the Funds as at the date which is three Business Days prior to the Effective Date; 10 -7- "MATERIAL ADVERSE EFFECT" when used in connection with AMVESCAP or Trimark means any effect of a Material Adverse Change relating to such party; "MATERIAL FACT" shall have the meaning ascribed thereto under the Securities Act; "OBCA" means the Business Corporations Act (Ontario) as now in effect and as it may be amended from time to time prior to the Effective Date; "OSC" means the Ontario Securities Commission; "OUTSIDE DATE" means November 15, 2000, or such later date as may be mutually agreed by the parties to this Agreement; "PERSON" includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Governmental Entity, syndicate or other entity whether or not having legal status; "PLAN OF ARRANGEMENT" means the plan of arrangement in the form and content of Schedule B annexed hereto and any amendments or variations thereto made in accordance with Section 6.1 or Article 6 of the Plan of Arrangement or made at the direction of the Court; "PRE-EFFECTIVE DATE PERIOD" shall mean the period from and including the date hereof to and including the Effective Time on the Effective Date; "PUBLICLY DISCLOSED BY AMVESCAP" means disclosed by AMVESCAP in a public filing made by it with the Company Announcement Office of the LSE or with the Registrar of Companies in England and Wales from January 1, 1999 to April 30, 2000; "PUBLICLY DISCLOSED BY TRIMARK" means disclosed by Trimark in a public filing made by it with the OSC from January 1, 1999 to April 30, 2000; "PUBLICLY DISCLOSED BY THE FUNDS" means disclosed by the applicable Fund in a public filing made by it with the OSC from January 1, 1999 to April 30, 2000; "REGULATORY APPROVALS" means those sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the lapse, without objection, of a prescribed time under a statute or regulation that states that a 11 -8- transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Entities, regulatory agencies or self-regulatory organizations, as set out in Schedule C hereto; "REPLACEMENT OPTION" has the meaning ascribed thereto in Section 2.2 of the Plan of Arrangement; "REPRESENTATIVES" has the meaning ascribed thereto in Section 4.7(1); "SECURITIES ACT" means the Securities Act (Ontario) and the rules, regulations and policies made thereunder, as now in effect and as they may be amended from time to time prior to the Effective Date; "SENIOR OFFICER" has the meaning ascribed thereto in the Securities Act; "SUBSIDIARY" means, with respect to a specified body corporate, any body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body corporate and shall include any body corporate, partnership, joint venture or other entity over which it exercises direction or control or which is in a like relation to a subsidiary; "SUPERIOR PROPOSAL" means any bona fide written Acquisition Proposal that in the good faith determination of the Board of Directors of Trimark, after consultation with its financial advisors and with outside counsel (a) is reasonably capable of being completed, taking into account all legal, financial, regulatory and other aspects of such proposal and the party making such proposal, and (b) would, if consummated in accordance with its terms, reasonably be expected to result in a transaction more favourable to the shareholders of Trimark from a financial point of view than the transaction contemplated by this Agreement; "SUPPORT AGREEMENT" means an agreement to be made between AMVESCAP, Callco and Exchangeco in the form and content of Schedule D annexed hereto, with such changes thereto as the parties hereto, acting reasonably, may agree; "TAX" and "TAXES" have the respective meanings ascribed thereto in Section j(v) of Schedule G; 12 -9- "TAX ACT" means the Income Tax Act (Canada) and the rules, regulations and policies made thereunder, as now in effect and as they may be amended from time to time prior to the Effective Date; "TAX RETURNS" means all returns, declarations, reports, information returns and statements required to be filed with any taxing authority relating to Taxes; "TRIMARK CIRCULAR" means the management information circular, and accompanying notice of the Trimark Meeting and including all appendices thereto, to be sent to holders of Trimark Common Shares and Trimark Options in connection with the Trimark Meeting; "TRIMARK COMMON SHARES" means the common shares in the capital of Trimark; "TRIMARK DOCUMENTS" has the meaning ascribed thereto in Section (l) of Schedule G; "TRIMARK EMPLOYEE PROFIT SHARING PLAN" means the Profit Sharing Plan for Trimark Employees; "TRIMARK EMPLOYEE SHARE PURCHASE PLAN" means the 1987 Employee Share Purchase Plan for Trimark employees, as amended; "TRIMARK MATERIAL SUBSIDIARY" means each subsidiary of Trimark the total assets of which constituted more than ten percent of the consolidated assets of Trimark or the total revenues of which constituted more than ten percent of the consolidated revenues of Trimark, in each case as set out in the financial statements of Trimark for the year ended March 31, 2000, and including each affiliate of Trimark that directly or indirectly holds an equity interest in each such subsidiary; "TRIMARK MEETING" means the annual and special meeting of Trimark Securityholders, including any adjournment or postponement thereof, to be called and held in accordance with the Interim Order to consider the Arrangement; "TRIMARK OPTIONS" means the Trimark Common Share purchase options granted under the Trimark Stock Option Plan; "TRIMARK PLANS" has the meaning ascribed thereto in Section k(i) of Schedule G; 13 -10- "TRIMARK SECURITYHOLDERS" means the holders of Trimark Common Shares and Trimark Options; "TRIMARK STOCK OPTION PLAN" means the Executive Stock Option Plan established by Trimark's board of directors on February 25, 1992, as amended; "TRUSTEE" means the trustee to be chosen by AMVESCAP, acting reasonably, to act as trustee under the Voting and Exchange Trust Agreement, being a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all the provinces of Canada, and any successor trustee appointed under the Voting and Exchange Trust Agreement; "UKLA" means the Financial Services Authority in its capacity as the competent authority for the purposes of Part IV of the Financial Services Act 1986 of the United Kingdom (or any successor Act); and "VOTING AND EXCHANGE TRUST AGREEMENT" means an agreement to be made between AMVESCAP, Exchangeco and the Trustee in connection with the Plan of Arrangement in the form and content of Schedule E annexed hereto, with such changes thereto as the parties hereto, acting reasonably, may agree. SECTION 1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this Agreement into Articles, Sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references to an "Article" or "Section" followed by a number and/or a letter refer to the specified Article or Section of this Agreement. The terms "this Agreement", "hereof", "herein" and "hereunder" and similar expressions refer to this Agreement (including the Schedules hereto) and not to any particular Article, Section or other portion hereof and include any agreement or instrument supplementary or ancillary hereto. SECTION 1.3 CURRENCY. Unless otherwise specifically indicated, all sums of money referred to in this Agreement are expressed in lawful money of Canada. SECTION 1.4 NUMBER, ETC. Unless the context otherwise requires, words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders. 14 -11- SECTION 1.5 DATE FOR ANY ACTION. In the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day. SECTION 1.6 ENTIRE AGREEMENT. This Agreement and the agreements and other documents herein referred to constitute the entire agreement between the parties hereto pertaining to the terms of the Arrangement and supersede all other prior agreements, understandings, negotiations and discussions, whether oral or written, between the parties hereto with respect to the terms of the Arrangement. SECTION 1.7 SCHEDULES. The following Schedules are annexed to this Agreement and are hereby incorporated by reference into this Agreement and form part hereof: Schedule A - Arrangement Resolution Schedule B - Plan of Arrangement Schedule C - Regulatory Approvals Schedule D - Support Agreement Schedule E - Voting and Exchange Trust Agreement Schedule F - AMVESCAP Equity Subordinated Debentures Term Sheet Schedule G - Trimark Representations and Warranties Schedule H - AMVESCAP Representations and Warranties SECTION 1.8 ACCOUNTING MATTERS. Unless otherwise stated, all accounting terms used in this Agreement in respect of Trimark shall have the meanings attributable thereto under Canadian generally accepted accounting principles and all determinations of an accounting nature in respect of Trimark required to be made shall be made in a manner consistent with Canadian generally accepted accounting principles and practices, consistently applied. Unless otherwise stated, all accounting terms used in this Agreement in respect of AMVESCAP shall have the meanings attributable thereto under United Kingdom generally accepted accounting principles and all determinations of an accounting nature required to be made in respect of AMVESCAP shall be made in a manner consistent with United Kingdom generally accepted accounting principles and practices, consistently applied. SECTION 1.9 KNOWLEDGE. Each reference herein to the knowledge of a party means, unless otherwise specified, the knowledge of such party's Senior Officers following due inquiry. 15 -12- ARTICLE 2 THE ARRANGEMENT SECTION 2.1 IMPLEMENTATION STEPS BY TRIMARK. Trimark covenants in favour of AMVESCAP that, on or prior to the Effective Date and subject to the satisfaction or waiver of the other conditions herein contained in favour of each such party, Trimark shall: (a) as soon as reasonably practicable, apply in a manner acceptable to AMVESCAP, acting reasonably, under Section 182 of the OBCA for an order approving the Arrangement and for the Interim Order, and thereafter proceed with and diligently seek the Interim Order; (b) convene and hold the Trimark Meeting not later than July 24, 2000 subject to adjournments permitted in accordance with Section 4.6 (provided that, in any event, the Trimark Meeting shall be at least one clear Business Day after the date upon which the AMVESCAP Meeting takes place) for the purpose of considering the Arrangement Resolution, the election of directors, the appointment of Trimark's auditors and the presentation of the financial statements of Trimark for the year ended March 31, 2000 (and for any other proper purpose approved by AMVESCAP, acting reasonably, as may be set out in the notice for such meeting) (provided however that if there is another Acquisition Proposal to be considered at the Trimark Meeting, the order of presentation, signage, proxy forms and other matters related thereto shall be acceptable to AMVESCAP, acting reasonably); (c) subject to Section 4.6, not adjourn, postpone or cancel (or propose for adjournment, postponement or cancellation) the Trimark Meeting without AMVESCAP's prior written consent except as required by Laws or required by Trimark's Securityholders, provided that Trimark shall be entitled to adjourn or postpone the Trimark Meeting to ensure that such meeting takes place at least one clear Business Day after the AMVESCAP Meeting takes place; (d) at the request of AMVESCAP, solicit from the Trimark Securityholders proxies in favour of the approval of the Arrangement Resolution (in a commercially reasonable manner) and use all commercially reasonable efforts to take all other action that is necessary or desirable to secure the approval of the Arrangement Resolution by the Trimark Securityholders, except to the extent that the Board of Directors has changed its recommendation in accordance with the terms of this Agreement (and subject in all cases to Section 6.4 hereof); 16 -13- (e) subject to obtaining the approvals as are required by the Interim Order, proceed with and diligently pursue the application to the Court for the Final Order; (f) subject to obtaining the Final Order and the satisfaction or waiver of the other conditions herein contained in favour of each party, send to the Director, for endorsement and filing by the Director, the Articles of Arrangement and such other documents as may be required in connection therewith under the OBCA to give effect to the Arrangement; and (g) subject to obtaining the Final Order and the satisfaction or waiver of the other conditions herein contained in its favour, execute the Support Agreement and the Voting and Exchange Trust Agreement. SECTION 2.2 IMPLEMENTATION STEPS BY AMVESCAP. AMVESCAP covenants in favour of Trimark that, on or prior to the Effective Date and subject to the satisfaction or waiver of the other conditions herein contained in favour of each such party: (a) AMVESCAP shall convene and hold the AMVESCAP Meeting within 35 days of the date of the mailing of the AMVESCAP Circular and prior to the Trimark Meeting, for the purpose of considering matters related to the Arrangement as are required to be approved by the AMVESCAP Shareholders as are referred to in the AMVESCAP Resolution (and for any other proper purpose as may be set out in the notice for such meeting); (b) AMVESCAP shall not adjourn, postpone or cancel (or propose for adjournment, postponement or cancellation) the AMVESCAP Meeting without Trimark's prior written consent except as required by Laws, U.K. common law principles or required by AMVESCAP's Shareholders; (c) AMVESCAP shall solicit from the AMVESCAP Shareholders proxies in favour of the approval of the AMVESCAP Resolution (in a commercially reasonable manner) and use all commercially reasonable efforts to take all other action that is necessary or desirable to secure the approval of the AMVESCAP Resolution by the AMVESCAP Shareholders, except to the extent that the Board of Directors of AMVESCAP has changed its recommendation in accordance with its fiduciary duties; 17 -14- (d) AMVESCAP shall incorporate and organize Callco and Exchangeco and provide for Exchangeco to have its share capital include the Exchangeable Shares; (e) in the accordance with the terms of the Plan of Arrangement, in the event that the Aggregate Principal Amount of Debentures is greater than $100,000,000, then AMVESCAP shall, and shall cause Exchangeco to, execute an indenture governing the AMVESCAP Equity Subordinated Debentures in a form consistent with the terms contained in Schedule F hereto; (f) AMVESCAP, Callco and Exchangeco shall execute and deliver the Support Agreement; (g) AMVESCAP and Exchangeco shall execute and deliver the Voting and Exchange Trust Agreement; and (h) AMVESCAP shall create and issue to the Trustee the AMVESCAP Special Voting Share. SECTION 2.3 INTERIM ORDER. The notice of motion for the application referred to in Section 2.1(a) shall request that the Interim Order provide: (a) for the class of Persons to whom notice is to be provided in respect of the Arrangement and the Trimark Meeting and for the manner in which such notice is to be provided; (b) that the requisite approval for the Arrangement Resolution shall be 66 2/3% of the votes cast on the Arrangement Resolution by Trimark Securityholders present in person or by proxy at the Trimark Meeting (such that each holder of Trimark Common Shares is entitled to one vote for each Trimark Common Share held) and each holder of Trimark Options is entitled to the number of votes represented by the number of Trimark Common Shares into which such holder's Trimark Option is convertible, rounded down to the nearest whole number of Trimark Common Shares and without regard to vesting requirements, if any); (c) that, in all other respects, the terms, restrictions and conditions of the by-laws and articles of Trimark, including quorum requirements and all other matters, shall apply in respect of the Trimark Meeting, except, in respect of the by-laws, as AMVESCAP and Trimark reasonably agree; and 18 -15- (d) for the grant of the Dissent Rights. SECTION 2.4 ARTICLES OF ARRANGEMENT. The Articles of Arrangement shall, with such other matters as are necessary to effect the Arrangement, implement the Plan of Arrangement. SECTION 2.5 TRIMARK CIRCULAR. As promptly as reasonably practicable after the execution and delivery of this Agreement, Trimark shall complete the Trimark Circular, the Letter of Transmittal and Election Form and the Holdco Letter of Transmittal and Election Form together with any other documents required by the Securities Act or other applicable Laws in connection with the Arrangement, and as promptly as practicable after the execution and delivery of this Agreement and after obtaining the Interim Order, and in any event, before June 23, 2000 (unless an extension of such date is consented to in writing by AMVESCAP, acting reasonably), Trimark shall, subject to the contemporaneous mailing of the AMVESCAP Circular or as otherwise agreed by the parties, cause the Trimark Circular, the Letter of Transmittal and Election Form and the Holdco Letter of Transmittal and Election Form and other documentation required in connection with the Trimark Meeting to be sent to each holder of Trimark Common Shares and filed as required by the Interim Order and applicable Laws. SECTION 2.6 AMVESCAP CIRCULAR. AMVESCAP shall, subject to the obtaining of required Regulatory Approvals in connection therewith, complete the AMVESCAP Circular together with any other documents required by the LSE and UKLA requirements or applicable Laws in connection with the AMVESCAP Meeting and shall, subject to the contemporaneous mailing of the Trimark Circular or as otherwise agreed by the parties, cause the AMVESCAP Circular and other documentation required in connection with the AMVESCAP Meeting to be sent to each AMVESCAP Shareholder as required by applicable Laws. SECTION 2.7 SECURITIES COMPLIANCE. AMVESCAP shall use its best efforts to (which, for greater certainty, shall not require AMVESCAP to consent to a term or condition of an approval or consent which AMVESCAP reasonably determines could have a material adverse impact on AMVESCAP) obtain all orders required from the applicable Canadian Securities Regulatory Authorities to permit the issuance and first resale of: (a) the Exchangeable Shares issued pursuant to the Arrangement and to holders of the AMVESCAP Equity Subordinated Debentures in accordance with the terms of such debentures; (b) the AMVESCAP Ordinary Shares issued at the Effective Time and from time to time (i) upon exchange of the Exchangeable Shares; and (ii) upon exercise of the Replacement Options; and (c) the AMVESCAP Equity Subordinated 19 -16- Debentures, in each case without qualification with or approval of or the filing of any prospectus, or the taking of any proceeding with, or the obtaining of any further order, ruling or consent from, any Governmental Entity in any of the provinces of Canada, or the fulfilment of any other legal requirement in any such jurisdiction (other than, with respect to such first resales, any restrictions on transfer by reason of, among other things, a holder being a "control person" of AMVESCAP or Exchangeco for purposes of Canadian federal, provincial or territorial securities Laws or equivalent United Kingdom Laws). SECTION 2.8 PREPARATION OF FILINGS, ETC. (1) AMVESCAP and Trimark shall use their reasonable best efforts to cooperate in the preparation, seeking and obtaining of all circulars, filings, consents, Regulatory Approvals and other approvals and other matters in connection with this Agreement and the Arrangement, provided, however, that, with respect to Canadian provincial or territorial qualifications, AMVESCAP shall not be required to register or qualify as a foreign corporation or to take any action that would subject it to service of process in any jurisdiction where it is not now so subject, except as to matters and transactions arising solely from the offer and sale of the Exchangeable Shares and the AMVESCAP Ordinary Shares and the AMVESCAP Equity Subordinated Debentures. (2) Each of AMVESCAP and Trimark shall furnish to the other all such information concerning it and its shareholders as may be required (and, in the case of its shareholders, available to it) for the effectuation of the actions described in Sections 2.5, 2.6 and 2.7 and the foregoing provisions of this Section 2.8, and each covenants that no information furnished by it (to its knowledge in the case of information concerning its shareholders) in connection with such actions or otherwise in connection with the consummation of the Arrangement and the other transactions contemplated by this Agreement will contain any untrue statement of a material fact or omit to state a material fact required to be stated in any such document or necessary in order to make any information so furnished for use in any such document not misleading in the light of the circumstances in which it is furnished. (3) Each of AMVESCAP and Trimark covenant to provide the other with a draft copy of the AMVESCAP Circular and the Trimark Circular, respectively, and any other documentation to be sent to the AMVESCAP Shareholders and Trimark Securityholders, respectively, in connection with this Agreement and the Arrangement from time to time prior to the mailing thereof on a confidential basis, and to provide the other with a reasonable opportunity to review and provide comments thereon. 20 -17- (4) AMVESCAP and Trimark shall each promptly notify the other if at any time before the Effective Time it becomes aware that the Trimark Circular or the AMVESCAP Circular, an application for an order or any other document described in Section 2.7 contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made, or that otherwise requires an amendment or supplement to the Trimark Circular or the AMVESCAP Circular or such application or other document. In any such event, AMVESCAP and Trimark shall cooperate in the preparation of a supplement or amendment to the Trimark Circular or the AMVESCAP Circular or such application or other document, as required and as the case may be, and, if required, shall cause the same to be distributed to shareholders of AMVESCAP or Trimark and/or filed with the relevant securities regulatory authorities and/or stock exchanges. (5) Trimark shall ensure that the Trimark Circular complies with all applicable Laws and, without limiting the generality of the foregoing, that the Trimark Circular does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made (other than with respect to any information relating to and provided by AMVESCAP or any third party that is not an affiliate of Trimark). Without limiting the generality of the foregoing, Trimark shall ensure that the Trimark Circular provides holders of Trimark Common Shares with information in sufficient detail to permit them to form a reasoned judgment concerning the matters to be placed before them at the Trimark Meeting, and AMVESCAP shall provide all information in respect of AMVESCAP reasonably necessary in order to do so. (6) AMVESCAP shall ensure that the AMVESCAP Circular complies with all applicable Laws and, without limiting the generality of the foregoing, that the AMVESCAP Circular does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made (other than with respect to any information relating to and provided by Trimark or any third party that is not an affiliate of AMVESCAP). Without limiting the generality of the foregoing, AMVESCAP shall ensure that the AMVESCAP Circular provides AMVESCAP Shareholders with information in sufficient detail to permit them to form a reasoned judgment concerning the matters to be placed before them at the AMVESCAP Meeting, and Trimark shall provide all information in respect of Trimark reasonably necessary in order to do so. 21 -18- SECTION 2.9 HOLDCO ALTERNATIVE. Persons who hold shares in the capital of Trimark indirectly through a Holding Company may have all of the outstanding Holdco Shares acquired by Exchangeco pursuant to the Plan of Arrangement in accordance with the terms of a Holdco Agreement provided that (i) such persons provide a written request to that effect to the Agent no later than 12 calendar days prior to the date of the Trimark Meeting, (ii) all of the holders of shares in the capital of such Holding Company execute such Holdco Agreement, (iii) all of the holders of shares in the capital of such Holding Company duly complete and deposit with the Agent prior to the Election Deadline a Holdco Letter of Transmittal and Election Form, and (iv) such other documents as AMVESCAP may require pursuant to the terms of such Holdco Agreement are delivered on or prior to the Effective Date. ARTICLE 3 REPRESENTATIONS AND WARRANTIES SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF TRIMARK. Trimark represents and warrants to and in favour of AMVESCAP as set out in Schedule G and acknowledges that AMVESCAP is relying upon such representations and warranties in connection with the matters contemplated by this Agreement. SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF AMVESCAP. AMVESCAP represents and warrants to and in favour of Trimark as set out in Schedule H and acknowledges that Trimark is relying upon such representations and warranties in connection with the matters contemplated by this Agreement. SECTION 3.3 SURVIVAL. For greater certainty, the representations and warranties of Trimark and AMVESCAP contained herein shall survive the execution and delivery of this Agreement and shall terminate on the earlier of the termination of this Agreement in accordance with its terms and the Effective Time. Any investigation by a party hereto and its advisors shall not mitigate, diminish or affect the representations and warranties of another party to this Agreement. ARTICLE 4 COVENANTS SECTION 4.1 RETENTION OF GOODWILL. During the Pre-Effective Date Period, Trimark will, subject to the fact that a transaction involving its businesses is contemplated hereby, continue to carry on the 22 -19- business of Trimark and its subsidiaries in a manner consistent with prior practice, working to preserve the attendant goodwill of such entities and to contribute to retention of that goodwill to and after the Effective Date, but subject to the following provisions of this Article 4. The following provisions of this Article 4 are intended to be in furtherance of this general commitment. SECTION 4.2 TREATMENT OF OPTIONS, ETC. (a) The Trimark Options will be dealt with as provided in the Plan of Arrangement. (b) In connection with the Trimark Employee Profit Sharing Plan: (i) all Trimark Common Shares purchased by or on behalf of a participant and not vested as of the date hereof shall be deemed to vest immediately prior to the Effective Time, and (ii) the Trimark Common Shares of each participant therein shall be delivered to AMVESCAP or the participant in accordance with the instructions of such participant. Trimark shall, forthwith after the date hereof, terminate or suspend the Trimark Employee Share Purchase Plan and each participant therein who has purchased any Trimark Common Shares thereunder with the benefit of a loan from Trimark or any subsidiary shall be offered the opportunity to either prepay or repay the loan in full, plus interest accrued thereon (if any), and receive such Trimark Common Shares, or to replace the Trimark Common Shares pledged as security therefor with all of the cash proceeds of the exchange thereof under the Arrangement, the Exchangeable Shares and/or AMVESCAP Equity Subordinated Debentures and/or AMVESCAP Ordinary Shares into which they are exchanged under the Arrangement as substitute collateral security on the same terms in each case, within 30 business days of the Effective Date, and Trimark shall adopt such requirements as changes, regulations or administrative provisions in form and substance satisfactory to AMVESCAP, acting reasonably, forthwith after the date hereof in accordance with the terms of the Trimark Employee Share Purchase Plan. In connection with the Trimark Deferred Share Unit Plan for Non-Employee Directors, Trimark will ensure that, notwithstanding any provisions to the contrary in such plan, that (i) the Settlement Date (as defined in such plan) for each of the directors of Trimark that has elected to participate in the plan is deemed to be the day prior to the Effective Date and (ii) all Deferred Shares Units that have been allocated to the account of a director of Trimark under such plan are settled on such date in cash as provided for in section 10 of the plan (and, for greater certainty, not in Trimark Common Shares as provided for in section 9 of the plan). 23 -20- SECTION 4.3 COVENANTS OF TRIMARK. (a) Trimark covenants and agrees that, until the Effective Date or the earlier termination of this Agreement in accordance with Article 6, except (i) with the consent of AMVESCAP to any deviation therefrom; (ii) as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP; or (iii) with respect to any matter expressly contemplated by this Agreement or the Plan of Arrangement, including the transactions involving the businesses of Trimark and AMVESCAP contemplated hereby, Trimark will, and will cause the Trimark Material Subsidiaries and the Funds to: (i) carry on its business in, and only in, the ordinary and regular course in substantially the same manner as heretofore conducted and in compliance with all applicable Laws and, to the extent consistent with such business, use all reasonable efforts to preserve intact its present business organization and keep available the services of its present officers and employees and others having business dealings with it to the end that its goodwill and business shall be maintained; provided that, for greater certainty, nothing herein shall restrict Trimark's ability to, with prior consultation with AMVESCAP, develop and launch new products; (ii) not split, consolidate or reclassify any of the outstanding shares of Trimark or any of the outstanding securities of a Fund, nor declare, set aside or pay any dividends on or make any other distributions on or in respect of the outstanding shares of Trimark, other than normal and customary quarterly dividends on the Trimark Common Shares, and for greater certainty, any such normal and customary quarterly dividend declared prior to, but with a payment date after, the Effective Date, shall remain payable on the payment date to the shareholder of Trimark as of the record date for such dividend; (iii) not amend the articles or by-laws of Trimark or any material contracts or constating documents of a Fund or materially amend the articles or by-laws of any subsidiary; (iv) not sell, pledge, encumber, allot, reserve, set aside or issue, authorize or propose the sale, pledge, encumbrance, allotment, reservation, setting aside or issuance of, or purchase or redeem or propose the purchase or redemption of, any shares in its capital stock (including under its normal course issuer bid) or of 24 -21- any Trimark Material Subsidiary thereof or any class of securities convertible or exchangeable into, or rights, warrants or options to acquire, any such shares or other convertible or exchangeable securities, except for (a) transactions between two or more wholly-owned Trimark subsidiaries or between a wholly-owned subsidiary of Trimark and Trimark, and (b) the issuance of Trimark Common Shares pursuant to Trimark Options granted prior to the date hereof which are or become fully vested and are duly exercised; (v) not amend, vary or modify the Trimark Employee Share Purchase Plan, the Trimark Employee Profit Sharing Plan or the Trimark Stock Option Plan or any Trimark Options except to cause the unvested Trimark Common Shares under the Trimark Employee Profit Sharing Plan to vest as contemplated hereby; (vi) not reorganize, amalgamate or merge Trimark or any of the Trimark Material Subsidiaries or any of the Funds with any other Person, nor acquire or agree to acquire by amalgamating, merging or consolidating with, purchasing substantially all of the assets or shares of or otherwise, any business of any corporation, partnership, association or other business organization or division thereof, which acquisition would be material to its business or financial condition on a consolidated basis; (vii) not to acquire any property or assets aggregating 10% or more of Trimark's total consolidated property and assets as at March 31, 1999 other than in the ordinary course of business consistent with past practice; (viii) except with respect to the sale of assets of Trimark or any subsidiary or any Fund in the ordinary and regular course of business consistent with past practice, not sell or otherwise dispose of any material assets (other than relating to transactions between two or more wholly-owned Trimark subsidiaries or between a wholly-owned subsidiary of Trimark and Trimark); (ix) carry out the terms of the Interim Order and the Final Order applicable to it and use its reasonable efforts to comply promptly with all requirements which applicable Laws may impose on Trimark or its subsidiaries with respect to the transactions contemplated hereby and by the Arrangement; 25 -22- (x) not, and cause each of the Trimark Material Subsidiaries not: (A) other than pursuant to existing employment, termination, compensation arrangements or policies, enter into or modify any employment, severance, collective bargaining or similar agreements, policies or arrangements with, or grant any material bonuses, salary increases, pension or supplemental pension benefits, profit sharing, retirement allowances, deferred compensation, incentive compensation, severance or termination pay to or any other form of compensation or with respect to any increase of benefits payable to, or make any loan to, any officers or directors of Trimark or any Trimark Material Subsidiary; or (B) other than in the usual, ordinary and regular course of business and consistent with past practice or pursuant to existing employment, termination, compensation arrangements or policies, in the case of employees who are not officers or directors of Trimark or any Trimark Material Subsidiary, take any action with respect to the entering into or material modifying of any material employment, severance, collective bargaining or similar agreements, policies or arrangements or grant any material bonuses, salary increases, pension or supplemental pension benefits, profit sharing, retirement allowances, deferred compensation, incentive compensation, severance or termination pay or any other form of compensation or with respect to any material increase of benefits payable, or make any material loans to employees; (xi) not, and will cause its subsidiaries and the Funds to not, settle or compromise any claim brought by any present, former or purported holder of any of its securities in connection with the transactions contemplated by this Agreement or the Arrangement prior to the Effective Date; (xii) not guarantee the payment of material indebtedness or incur material indebtedness for money borrowed or issue or sell any debt securities except in the ordinary and regular course of business consistent with past practice, other than as has been set forth in writing on the date hereof by Trimark to AMVESCAP in a form acceptable to AMVESCAP; 26 -23- (xiii) not, except in the usual, ordinary and regular course of business and consistent with past practice: (A) satisfy or settle any claims or liabilities prior to the same being due, except such as have been reserved against in the financial statements of Trimark and its subsidiaries or as has been disclosed in writing to AMVESCAP by Trimark in a form acceptable to AMVESCAP, which are, individually or in the aggregate, material; (B) grant any waiver, exercise any option or relinquish any contractual rights which are, individually or in the aggregate, material; (C) permit any of the Funds to do any of the foregoing; or (D) enter into any interest rate, currency or commodity swaps, hedges or other similar financial instruments; (xiv) use its reasonable commercial efforts (or cause each of its subsidiaries to use reasonable commercial efforts) to cause its current insurance (or re-insurance) policies not to be cancelled or terminated or any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance and re-insurance companies of nationally recognized standing providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect; (xv) not make any changes to existing accounting practices relating to Trimark or any subsidiary or any Fund except as required by Canadian Law or required by generally accepted accounting principles or make any material tax election inconsistent with past practice; and (xvi) promptly advise AMVESCAP orally and, if then requested, in writing: (A) of any event occurring subsequent to the date of this Agreement that would render any representation or warranty of Trimark contained in this Agreement (except any such representation or warranty which speaks solely as of a date prior to the occurrence of such event), if made on or as of the date of such event or the Effective Date, untrue or inaccurate in any material respect; (B) of any Material Adverse Change in respect of Trimark or any Fund; and 27 -24- (C) of any material breach by Trimark of any covenant or agreement contained in this Agreement; (b) Trimark shall and shall cause its subsidiaries and the Funds to perform all obligations required or desirable to be performed by Trimark or any of its subsidiaries or the Funds under this Agreement, co-operate with AMVESCAP in connection therewith, and do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated in this Agreement and, without limiting the generality of the foregoing, Trimark shall and where appropriate shall cause its subsidiaries and the Funds to: (i) use all reasonable efforts to obtain the requisite approvals of holders of Trimark Securityholders to the Arrangement as contemplated in Section 2.1(d) and the requisite approvals of unitholders of the Funds to the Arrangement; (ii) apply for and use all reasonable efforts to obtain all Regulatory Approvals relating to Trimark or any of its subsidiaries or any of the Funds and, in doing so, to keep AMVESCAP reasonably informed as to the status of the proceedings related to obtaining the Regulatory Approvals, including, but not limited to, providing AMVESCAP with copies of all related applications and notifications, in draft form, in order for AMVESCAP to provide its reasonable comments; (iii) give or file, as the case may be, in a timely fashion, all notices required in connection with the transactions contemplated hereby, in each case in form and substance satisfactory to AMVESCAP including, without limitation, notice to all security holders of the Funds of the change in control of the manager (as required under National Instrument 81-102); (iv) apply for and use all reasonable efforts to obtain the Interim Order and the Final Order; (v) defend all lawsuits or other legal, regulatory or other proceedings challenging or affecting this Agreement or the consummation of the transactions contemplated hereby; (vi) use its reasonable efforts to have lifted or rescinded any injunction or restraining order or other order which may 28 -25- adversely affect the ability of the parties to consummate the transactions contemplated hereby; (vii) effect all necessary registrations, filings and submissions of information required by Governmental Entities from Trimark or any of its subsidiaries or any of the Funds; and (viii) use its reasonable efforts to obtain all necessary waivers, consents and approvals required to be obtained by Trimark or a subsidiary from other parties to loan agreements, leases or other contracts; and (c) Trimark shall carry out the terms of the Interim Order and Final Order applicable to it and use its reasonable efforts to comply promptly with all requirements which applicable Laws may impose on Trimark or its subsidiaries with respect to the transactions contemplated hereby and by the Arrangement. SECTION 4.4 COVENANTS OF AMVESCAP. AMVESCAP hereby covenants and agrees (and, if applicable, will cause its subsidiaries): (a) to perform all obligations required or desirable to be performed by it under this Agreement, to co-operate with Trimark in connection therewith, and to do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by this Agreement and, without limiting the generality of the foregoing, to: (i) use all reasonable efforts to obtain the requisite approvals of the AMVESCAP Shareholders as contemplated in Section 2.2(c); (ii) apply for and use all reasonable efforts to obtain all Regulatory Approvals required to be obtained by AMVESCAP, and, in doing so, to keep Trimark reasonably informed as to the status of the proceedings related to obtaining the Regulatory Approvals, including, but not limited to, providing Trimark with copies of all related applications and notifications, in draft form, in order for Trimark to provide its reasonable comments; (iii) defend all lawsuits or other legal, regulatory or other proceedings to which it is a party challenging or affecting this Agreement or the consummation of the transactions contemplated hereby; 29 -26- (iv) use all reasonable efforts to have lifted or rescinded any injunction or restraining order or other order relating to AMVESCAP which may adversely affect the ability of the parties to consummate the transactions contemplated hereby; (v) effect all necessary registrations, filings and submissions of information required by Governmental Entities from AMVESCAP or its subsidiaries; (vi) reserve a sufficient number of AMVESCAP Ordinary Shares for issuance (A) to the Trimark Securityholders at the Effective Time pursuant to the Arrangement; and (B) from time to time (I) upon the exchange of Exchangeable Shares; and (II) upon the exercise of the Replacement Options; and (vii) to cause Exchangeco to reserve a sufficient number of Exchangeable Shares for issuance (A) to the Trimark Securityholders at the Effective Time pursuant to the Arrangement; and (B) from time to time in accordance with the terms of the AMVESCAP Equity Subordinated Debentures; (b) to use its best efforts to (which, for greater certainty, shall not require AMVESCAP to consent to a term or condition of an approval or consent which AMVESCAP reasonably determines could have a material adverse impact on AMVESCAP): (i) cause the Exchangeable Shares (including the Exchangeable Shares that may be issued from time to time in accordance with the terms of the AMVESCAP Equity Subordinated Debentures) and the AMVESCAP Equity Subordinated Debentures to be listed and posted for trading on the Toronto Stock Exchange by the Effective Date and to maintain such listings for so long as there are Exchangeable Shares or AMVESCAP Equity Subordinated Debentures, as applicable, outstanding (other than those securities held by AMVESCAP or any of its affiliates); (ii) ensure that Exchangeco has, at the Effective Time and for so long as there are Exchangeable Shares outstanding (other than those Exchangeable Shares held by AMVESCAP or any of its affiliates), a "substantial Canadian presence" within the meaning of subsection 206(1.1) of the Tax Act; 30 -27- (iii) cause the listing on the Official List of UKLA and admission to trading on the LSE of the AMVESCAP Ordinary Shares to be issued at the Effective Time and from time to time (A) upon exchange of the Exchangeable Shares; and (B) upon the exercise of the Replacement Options; and (iv) ensure that Exchangeco is, at the Effective Time and for so long as there are Exchangeable Shares outstanding (other than those Exchangeable Shares held by AMVESCAP or any of its affiliates), a "taxable Canadian corporation" and not a "mutual fund corporation", each within the meaning of the Tax Act; (c) to cause Exchangeco to enter into elections with holders of Trimark Common Shares who receive Exchangeable Shares under section 85 of the Tax Act and the applicable provincial legislation, where necessary, under the Arrangement and, where applicable, an election under section 57.9 of the Corporations Tax Act (Ontario) (or such similar elections as may be applicable under the analogous provisions of any other provincial corporation tax law); (d) to carry out the terms of the Interim Order and Final Order applicable to it and use its reasonable efforts to comply promptly with all requirements which applicable Laws may impose on AMVESCAP or its subsidiaries with respect to the transactions contemplated hereby and by the Arrangement; (e) that it has read and accepts the terms of the executive severance agreements between Trimark and each of B.J. Badeau, M.K. Feeny, O. Murray, M. Taylor, N. Mancini, W. Kanko, A. Hall, B. Deegan, R. Bradeen, K.E. Ash and E. Hoyle, each dated April 28, 2000, and AMVESCAP will cause Trimark to abide by and perform (and not to challenge or contest) the provisions thereof and the obligations of Trimark thereunder following the Arrangement; (f) until the Effective Date or the earlier termination of this Agreement in accordance with Article 6, promptly advise Trimark orally and, if then requested, in writing: (i) of any event occurring subsequent to the date of this Agreement that would render any representation or warranty of AMVESCAP contained in this Agreement (except any such representation or warranty which speaks solely as of a date prior to the occurrence of such event), if made on or as of the 31 -28- date of such event or the Effective Date, untrue or inaccurate in any material respect; (ii) of any Material Adverse Change in respect of AMVESCAP; and (iii) of any material breach by AMVESCAP of any covenant or agreement contained in this Agreement; and (g) until the Effective Date, and other than to implement the transactions in the manner contemplated by the Arrangement, not to amend its articles or by-laws or enter into any transaction, if such amendment or transaction would materially adversely affect the treatment under the Tax Act or U.K. tax legislation (as in effect on the date hereof) of the consideration to be received by the holders of Trimark Common Shares pursuant to the Arrangement, who are resident in Canada. SECTION 4.5 COVENANTS REGARDING NON-SOLICITATION. (1) Subject to Section 4.6, Trimark shall not, directly or indirectly, through any officer, director, employee, representative (including for greater certainty any investment banker, lawyer or accountant) or agent of Trimark or any of its subsidiaries, (i) solicit, initiate, knowingly encourage or otherwise facilitate (including by way of furnishing information or entering into any form of agreement, arrangement or understanding) the initiation of any inquiries or proposals regarding an Acquisition Proposal, (ii) participate in any discussions or negotiations regarding any Acquisition Proposal, (iii) approve or recommend any Acquisition Proposal or (iv) enter into any agreement, arrangement or understanding related to any Acquisition Proposal. Notwithstanding the preceding part of this Section 4.5(1) and any other provision of this Agreement, nothing shall prevent the Board of Directors of Trimark from considering, participating in any discussions or negotiations, or entering into a confidentiality agreement and providing information pursuant to Section 4.5(3) (but subject to Section 4.6 not approve, recommend or enter into any agreement, arrangement or understanding), regarding an unsolicited bona fide written Acquisition Proposal (a) in respect of which any required financing has been demonstrated to the satisfaction of the Board of Directors, acting in good faith, to be reasonably likely to be obtained, (b) that did not otherwise result from a breach of this Section 4.5, and (c) which the Board of Directors of Trimark has determined in good faith, after consultation with financial advisors and with outside counsel, is a Superior Proposal. Trimark shall, and shall cause the officers, directors, employees, representatives and agents of Trimark and its subsidiaries to, cease immediately all discussions and negotiations regarding any proposal that constitutes, or may reasonably be expected to lead to, an Acquisition 32 -29- Proposal, and request the return or destruction of all information provided in connection therewith. For greater certainty, a bona fide written Acquisition Proposal shall not be considered to be solicited solely because it is proposed by a party with whom Trimark had held discussions or negotiations with respect to a potential Acquisition Proposal prior to May 5, 2000. (2) Trimark shall forthwith notify AMVESCAP, at first orally and then in writing, of any Acquisition Proposal and any inquiry that could lead to an Acquisition Proposal, or any amendments to the foregoing, or any request for non-public information relating to Trimark or any Trimark Material Subsidiary in connection with an Acquisition Proposal or for access to the properties, books or records of Trimark or any Trimark Material Subsidiary by any Person that informs Trimark or such Trimark Material Subsidiary that it is considering making, or has made, an Acquisition Proposal. Such notice shall include a description of the material terms and conditions of any proposal, the identity of the Person making such proposal, inquiry or contact and provide such other details of the proposal, inquiry or contact as AMVESCAP may reasonably request. Trimark shall keep AMVESCAP informed of the status including any change to the material terms of any such Acquisition Proposal or inquiry. (3) If Trimark receives a request for material non-public information from a Person who has made an unsolicited bona fide written Acquisition Proposal and Trimark is permitted, subject to and as contemplated under the second sentence of Section 4.5(1), to negotiate the terms of such Acquisition Proposal, then, and only in such case, the Board of Directors of Trimark may, subject to the execution by such Person of a confidentiality agreement containing employee non-solicitation and standstill provisions substantially similar to those contained in the confidentiality agreement then in effect between Trimark and AMVESCAP (which standstill provision may be waived by the Board of Directors of Trimark in its sole and unfettered discretion), provide such Person with access to information regarding Trimark; provided, however, that the Person making the Acquisition Proposal shall not be precluded under such confidentiality agreement from making the Acquisition Proposal (or, subject to Section 4.6(4), any material amendment thereto) and provided further that Trimark sends a copy of any such confidentiality agreement to AMVESCAP promptly upon its execution and AMVESCAP is provided with a list of or copies of the information provided to such Person and immediately provided with access to similar information to which such Person was provided. (4) Trimark shall ensure that its officers, directors and employees and its subsidiaries and their officers, directors and employees and any financial advisors or other advisors or representatives retained by it or its subsidiaries 33 -30- are aware of the provisions of this Section 4.5, and it shall be responsible for any breach of this Section 4.5 by its and its subsidiaries' officers, directors, employees, representatives or agents. SECTION 4.6 NOTICE BY TRIMARK OF SUPERIOR PROPOSAL DETERMINATION. (1) Notwithstanding Sections 4.5(1), (2) and (3), but subject to AMVESCAP's rights under Section 6.3(3)(c) and Section 6.4, Trimark may accept, approve, recommend or enter into any agreement, understanding or arrangement in respect of a Superior Proposal if, and only if: (i) it has provided AMVESCAP with a copy of the Superior Proposal document; and (ii) four calendar days (the "MATCH PERIOD") shall have elapsed from the later of the date AMVESCAP received written notice ("SECTION 4.6 NOTICE") advising AMVESCAP that Trimark's Board of Directors has resolved, subject only to compliance with this Section 4.6, to accept, approve, recommend or enter into an agreement, understanding or arrangement in respect of such Superior Proposal, specifying the terms and conditions of such Superior Proposal and identifying the Person making such Superior Proposal and the date AMVESCAP received a copy of such Superior Proposal. In the event that Trimark provides AMVESCAP with Section 4.6 Notice on a date which is less than four calendar days prior to the Trimark Meeting, Trimark shall adjourn the Trimark Meeting to a date which is not less than four calendar days and not more than 10 calendar days after the date of the Section 4.6 Notice. Any information provided by Trimark to AMVESCAP pursuant to this Section 4.6 or pursuant to Section 4.5 shall constitute "Information" under Section 4.7(2). (2) During a Match Period, Trimark agrees that AMVESCAP shall have the right, but not the obligation, to offer to amend the terms of this Agreement. The Board of Directors of Trimark will review any offer by AMVESCAP to amend the terms of this Agreement in good faith in order to determine, in its discretion in the exercise of its fiduciary duties, whether AMVESCAP's offer upon acceptance by Trimark would result in such Superior Proposal ceasing to be a Superior Proposal. If the Board of Directors of Trimark so determines, it will enter into an amended agreement with AMVESCAP reflecting AMVESCAP's amended proposal. If the Board of Directors of Trimark continues to believe, in good faith, after consultation with its financial advisors and outside counsel, that such Superior Proposal remains a Superior Proposal and therefore rejects AMVESCAP's offer to amend the terms of this Agreement, Trimark may approve, recommend, accept or enter into an agreement, understanding or arrangement with respect to the Superior Proposal provided that such acceptance or agreement does not obligate Trimark or any other Person to seek to interfere with the completion of the Arrangement or impose any "break", "hello" or other fees or options or rights to acquire assets or securities, or any other obligations that would survive the 34 -31- Effective Date, on Trimark or any subsidiary unless and until this Agreement is terminated in accordance with its terms. In addition, in such circumstances, Trimark may proceed with such approvals, consents, filings of or required by Governmental Entities and such other Persons as Trimark shall consider appropriate in order to consummate such Superior Proposal, provided that such activity does not interfere with the completion of the Arrangement. (3) Subject to Section 4.6(1), nothing contained in this Section 4.6 shall limit in any way the obligation of Trimark to convene and hold the Trimark Meeting in accordance with Section 2.1 of this Agreement. (4) Trimark also acknowledges and agrees that each successive material amendment to any Acquisition Proposal shall constitute a new Acquisition Proposal for purposes of the requirement under clause (ii) of Section 4.6(1) to initiate an additional Section 4.6 Notice and Match Period. SECTION 4.7 ACCESS TO INFORMATION. (1) Subject to Sections 4.7(2) and applicable Laws, upon reasonable notice, Trimark shall (and shall cause each of its subsidiaries to) afford AMVESCAP's officers, employees, counsel, accountants and other authorized representatives and advisors ("REPRESENTATIVES") access, during normal business hours from the date hereof and until the earlier of the Effective Date or the termination of this Agreement, to its and its subsidiaries' and the Funds' properties, books, contracts and records as well as to its management personnel, and, during such period, Trimark shall (and shall cause each of its subsidiaries and the Funds to) furnish promptly to AMVESCAP all information concerning Trimark's and its subsidiaries' and the Funds' businesses, properties and personnel as AMVESCAP may reasonably request. Subject to Sections 4.7(2) and applicable Laws, upon reasonable notice, AMVESCAP shall afford Trimark's Representatives access, upon reasonable notice and during normal business hours from the date hereof and until the earlier of the Effective Date or the termination of this Agreement, to such of AMVESCAP's management personnel as AMVESCAP may determine, acting reasonably, and, during such period, AMVESCAP shall furnish promptly to Trimark all information respecting material changes in AMVESCAP's and AMVESCAP Material Subsidiaries' businesses, properties and personnel as Trimark may reasonably request. (2) Each of AMVESCAP and Trimark acknowledges that certain information provided to it under Section 4.7(1) above will be non-public and/or proprietary in nature (the "INFORMATION") and will be subject to the terms of the Confidentiality Agreement. For greater certainty, the provisions of the 35 -32- Confidentiality Agreement shall survive the termination of this Agreement, provided that the Confidentiality Agreement shall terminate at the Effective Time notwithstanding anything to the contrary contained therein. SECTION 4.8 CLOSING MATTERS. Each of AMVESCAP and Trimark shall deliver, at the closing of the transactions contemplated hereby, such customary certificates, resolutions and other closing documents as may be required by the other party hereto, acting reasonably. SECTION 4.9 INDEMNIFICATION. (1) AMVESCAP agrees that all rights to indemnification or exculpation now existing in favour of the directors or officers of Trimark or any subsidiary as provided in its articles of incorporation or by-laws thereof or in any agreement in effect on the date hereof shall survive the Arrangement and shall continue in full force and effect for a period of not less than seven years from the Effective Time. (2) There shall be maintained in effect, for not less than seven years from the Effective Time, coverage substantially equivalent to that in effect under the current policies of the directors' and officers' liability insurance maintained by Trimark or any of its subsidiaries, as the case may be, which is no less advantageous, and with no gaps or lapses in coverages with respect to matters occurring prior to the Effective Time. Alternatively, at AMVESCAP's option, it may cause Trimark to purchase "run-off" directors' and officers' liability insurance providing coverage substantially as favourable to such directors and officers as that in effect under such current policies to cover prior events during such seven year period or the balance thereof. ARTICLE 5 CONDITIONS SECTION 5.1 MUTUAL CONDITIONS PRECEDENT. The respective obligations of the parties hereto to complete the transactions contemplated by this Agreement shall be subject to the satisfaction, on or before the Effective Date, of the following conditions precedent, each of which may only be waived by the mutual consent of AMVESCAP and Trimark: (a) the Arrangement shall have been approved at the Trimark Meeting by not less than two-thirds of the votes cast by the Trimark Securityholders who are represented at the Trimark Meeting; 36 -33- (b) the Arrangement shall have been approved at the Trimark Meeting in accordance with any conditions in addition to those set out in Section 5.1(a) which may be imposed by the Interim Order; (c) the Interim Order and the Final Order shall each have been obtained in form and on terms satisfactory to each of Trimark and AMVESCAP, acting reasonably, and shall not have been set aside or modified in a manner unacceptable to such parties on appeal or otherwise; (d) the AMVESCAP Shareholders shall have approved the AMVESCAP Resolution at the AMVESCAP Meeting by the requisite levels required by applicable Laws; (e) there shall not be in force any final and non-appealable injunction, order or decree restraining or enjoining the consummation of the transactions contemplated by this Agreement and there shall be no proceeding (other than an appeal made in connection with the Arrangement), of a judicial or administrative nature or otherwise, brought by a Governmental Entity in progress or threatened that relates to or results from the transactions contemplated by this Agreement that would, if successful, result in an order or ruling that would preclude completion of the transactions contemplated by this Agreement in accordance with the terms hereof or would otherwise be inconsistent with the Regulatory Approvals which have been obtained; (f) this Agreement shall not have been terminated pursuant to Article 6; (g) the Exchangeable Shares including those issuable in accordance with the terms of the AMVESCAP Equity Subordinated Debentures and the AMVESCAP Equity Subordinated Debentures issuable pursuant to the Arrangement shall have been conditionally approved for listing on the Toronto Stock Exchange (or its successor), the LSE shall have agreed (subject to allotment) to admit to trading on the LSE the AMVESCAP Ordinary Shares issuable pursuant to the Arrangement on the Effective Date and the UKLA shall have agreed (subject to allotment) to admit to the Official List of the UKLA the AMVESCAP Ordinary Shares issuable pursuant to the Arrangement on the Effective Date, in each case, subject to the filing of required documentation and other usual requirements; (h) other than the Regulatory Approvals, all consents, waivers, permits, orders and approvals of any Governmental Entity, and the expiry of any waiting periods, in connection with, or required to permit, the consummation of the Arrangement, the failure of which to obtain or 37 -34- the non-expiry of which would constitute a criminal offense, or would have a Material Adverse Effect on AMVESCAP or Trimark, as the case may be, shall have been obtained or received on terms that will not have a Material Adverse Effect on AMVESCAP and/or Trimark; there shall not be pending or threatened any suit, action or proceeding by any Governmental Entity: (i) seeking to prohibit or restrict the acquisition by AMVESCAP or any of its subsidiaries of any Trimark Common Shares or Trimark Options, seeking to restrain or prohibit the consummation of the Plan of Arrangement or seeking to obtain from Trimark or AMVESCAP any damages directly or indirectly in connection with the Arrangement, (ii) seeking to prohibit or materially limit the ownership or operation by AMVESCAP or any of its subsidiaries of any material portion of the business or assets of Trimark or any of its subsidiaries or to compel AMVESCAP or any of its subsidiaries to dispose of or hold separate any material portion of the business or assets of Trimark or any of its subsidiaries, (iii) seeking to impose limitations on the ability of AMVESCAP or any of its subsidiaries to acquire or hold, or exercise full rights of ownership of, any Trimark Common Shares or Trimark Options, including the right to vote the Trimark Common Shares purchased by them on all matters properly presented to the shareholders of Trimark, (iv) seeking to prohibit AMVESCAP or any of its subsidiaries from effectively controlling in any material respect the business or operations of Trimark or any of its subsidiaries or (v) which otherwise is reasonably likely to have a Material Adverse Effect on Trimark or AMVESCAP; and (i) the Regulatory Approvals shall have been obtained or satisfied on terms and conditions satisfactory to AMVESCAP and Trimark (but only insofar as it would directly affect Trimark Securityholders) acting reasonably. SECTION 5.2 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF AMVESCAP. (1) The obligations of AMVESCAP to complete the transactions contemplated by this Agreement shall also be subject to the fulfilment of each of the following conditions precedent (each of which is for AMVESCAP's exclusive benefit and may be waived by AMVESCAP): (a) all covenants of Trimark under this Agreement to be performed on or before the Effective Date shall have been duly performed by Trimark in all material respects; 38 -35- (b) the representations and warranties of Trimark shall have been true and correct in all material respects on the date hereof and shall be true and correct in all material respects as of the Effective Date as if made on and as of such date (except to the extent such representations and warranties speak solely as of an earlier date, in which event such representations and warranties shall be true and correct in all material respects as of such earlier date, or except as affected by transactions contemplated or permitted by this Agreement) and AMVESCAP shall have received a certificate of Trimark addressed to AMVESCAP and dated the Effective Date, signed on behalf of Trimark by the Chief Executive Officer and the Chief Financial Officer of Trimark (on Trimark's behalf and without personal liability in the absence of fraud or fraudulent concealment), confirming the same as at the Effective Date; (c) between the date hereof and the Effective Date, there shall not have occurred a Material Adverse Change to Trimark; (d) the Board of Directors of Trimark shall have adopted all necessary resolutions, and all other necessary corporate action shall have been taken by Trimark and the subsidiaries to permit the consummation of the Arrangement; (e) the transactions contemplated by this Agreement shall have been approved by unitholders of each of the Funds, to the extent and in the manner required under the terms of such Fund's constating documents and material agreements and upon such terms and conditions as are satisfactory to AMVESCAP, acting reasonably; and (f) the holders of Trimark Common Shares representing in excess of 10% of the outstanding Trimark Common Shares shall not have exercised (and not withdrawn such exercise to the satisfaction of AMVESCAP by the close of business on the day after the day of the Trimark Meeting) dissent or similar rights in connection with the Arrangement. (2) AMVESCAP may not rely on the failure to satisfy any of the above conditions precedent if the condition precedent would have been satisfied but for a default by AMVESCAP in complying with its obligations hereunder. SECTION 5.3 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TRIMARK. (1) The obligations of Trimark to complete the transactions contemplated by this Agreement shall also be subject to the following conditions precedent (each of which is for the exclusive benefit of Trimark and may be waived by Trimark): 39 -36- (a) all covenants of AMVESCAP under this Agreement to be performed on or before the Effective Date shall have been duly performed by AMVESCAP in all material respects; (b) all representations and warranties of AMVESCAP under this Agreement shall have been true and correct in all material respects on the date hereof and shall be true and correct in all material respects as of the Effective Date as if made on and as of such date (except to the extent such representations and warranties speak solely as of an earlier date, in which event such representations and warranties shall be true and correct in all material respects as of such earlier date, or except as affected by transactions contemplated or permitted by this Agreement) and Trimark shall have received a certificate of AMVESCAP addressed to Trimark and dated the Effective Date, signed on behalf of AMVESCAP by two Senior Officers of AMVESCAP (on its behalf and without personal liability in the absence of fraud or fraudulent concealment), confirming the same as at the Effective Date; (c) the Board of Directors of AMVESCAP shall have adopted all necessary resolutions, and all other necessary corporate action shall have been taken by AMVESCAP to permit the consummation of the Arrangement; and (d) between the date hereof and the Effective Date, there shall not have occurred a Material Adverse Change to AMVESCAP. (2) Trimark may not rely on the failure to satisfy any of the above conditions precedent if the condition precedent would have been satisfied but for a material default by Trimark in complying with its obligations hereunder. SECTION 5.4 NOTICE AND CURE PROVISIONS. (1) AMVESCAP and Trimark will give prompt notice to the other of the occurrence, or failure to occur, at any time from the date hereof until the Effective Date, of any event or state of facts which occurrence or failure would, or would be likely to: (a) cause any of the representations or warranties of the other party contained herein to be untrue or inaccurate in any material respect on the date hereof or on the Effective Date; or (b) result in the failure in any material respect to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by the other hereunder prior to the Effective Date. 40 -37- (2) Neither AMVESCAP nor Trimark may elect not to complete the transactions contemplated hereby pursuant to the conditions precedent contained in Sections 5.1, 5.2 or 5.3, or exercise any termination right arising therefrom, unless forthwith and in any event prior to the filing of the Articles of Arrangement for acceptance by the Director, AMVESCAP or Trimark, as the case may be, has delivered a written notice to the other specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which AMVESCAP or Trimark, as the case may be, are asserting as the basis for the non-fulfilment of the applicable condition precedent or the exercise of the termination right, as the case may be. If any such notice is delivered, provided that Trimark or AMVESCAP, as the case may be, is proceeding diligently to cure such matter, if such matter is susceptible to being cured (for greater certainty, except by way of disclosure in the case of representations and warranties), the other may not terminate this Agreement as a result thereof until the later of 30 days prior to the Outside Date and the expiration of a period of 30 days from such notice. If such notice has been delivered prior to the date of the Trimark Meeting and/or the AMVESCAP Meeting, such meeting(s) shall, unless the parties agree otherwise, be postponed or adjourned until the expiry of such period. If such notice has been delivered prior to the making of the application for the Final Order or the filing of the Articles of Arrangement with the Director, such application and such filing shall be postponed until the expiry of such period. For greater certainty, in the event that such matter is cured within the time period referred to herein without a Material Adverse Effect on the curing party, this Agreement may not be terminated as a result of the cured breach. SECTION 5.5 SATISFACTION OF CONDITIONS. The conditions precedent set out in Sections 5.1, 5.2 and 5.3 shall be conclusively deemed to have been satisfied, waived or released when, with the agreement of AMVESCAP and Trimark, a certificate of arrangement in respect of the Arrangement is issued by the Director. ARTICLE 6 AMENDMENT AND TERMINATION SECTION 6.1 AMENDMENT. This Agreement and the Plan of Arrangement may, at any time and from time to time before or after the holding of the Trimark Meeting or the AMVESCAP Meeting but not later than the Effective Date, be amended by mutual written agreement of the parties hereto, and any such amendment may, subject to applicable Laws and the Interim Order, without limitation: 41 -38- (a) change the time for performance of any of the obligations or acts of the parties; (b) waive any inaccuracies or modify any representation or warranty contained herein or in any document delivered pursuant hereto; (c) waive compliance with or modify any of the covenants herein contained and waive or modify performance of any of the obligations of the parties; (d) provide for or assist mitigation of any liability for Tax imposed on any person as a result of this Agreement, the Plan of Arrangement, and/or any transactions or documents contemplated therein; (e) assist in obtaining the final consent of the UK Treasury as contemplated in Schedule C to this Agreement; and/or (f) waive compliance with or modify any conditions precedent herein contained. SECTION 6.2 MUTUAL UNDERSTANDING REGARDING AMENDMENTS. The parties agree that if AMVESCAP or Trimark, as the case may be, propose any amendment or amendments to this Agreement or to the Plan of Arrangement, the other will act reasonably in considering such amendment and if the other and its security holders are not prejudiced by reason of any such amendment the other will co-operate in a reasonable fashion with AMVESCAP or Trimark, as the case may be, so that such amendment can be effected subject to applicable Laws and the rights of the security holders. SECTION 6.3 TERMINATION. (1) If any condition contained in Sections 5.1 or 5.2 is not satisfied at or before the Outside Date to the satisfaction of AMVESCAP, acting reasonably, then AMVESCAP may, subject to Section 5.4 and to Section 5.2(2) in the case of Section 5.2, by notice to Trimark terminate this Agreement and the obligations of the parties hereunder (except as otherwise herein provided, including under Section 6.4), but without detracting from the rights of AMVESCAP arising from any breach by Trimark but for which the condition would have been satisfied. (2) If any condition contained in Sections 5.1 or 5.3 is not satisfied at or before the Outside Date to the satisfaction of Trimark, acting reasonably, then Trimark may, subject to Section 5.4 and to Section 5.3(2) in the case of Section 5.3, by notice to AMVESCAP terminate this Agreement and the obligations of the parties hereunder (except as otherwise herein provided, including under 42 -39- Section 6.4), but without detracting from the rights of Trimark arising from any breach by AMVESCAP but for which the condition would have been satisfied. (3) This Agreement may: (a) be terminated by the mutual agreement of Trimark and AMVESCAP (for greater certainty, without further action on the part of the Trimark Securityholders or AMVESCAP Shareholders if terminated after the holding of the Trimark Meeting or the AMVESCAP Meeting, as applicable); (b) be terminated by either Trimark or AMVESCAP if there shall be passed any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited; (c) be terminated by AMVESCAP if (A) the Board of Directors of Trimark shall have failed to recommend or shall have withdrawn, modified or changed in a manner adverse to AMVESCAP its approval or recommendation of this Agreement or the Arrangement (unless AMVESCAP shall have suffered a Material Adverse Change or AMVESCAP shall have made a misrepresentation at the date hereof or breached its covenant in Section 4.4 (g) or breached any other covenant under this Agreement in such a manner that, taking into account Sections 5.3(2) and 5.4, Trimark would be entitled to rely on the failure of a condition set forth in Sections 5.3(1)(a), (b) or (c) as a reason not to complete the Arrangement), or (B) the Board of Directors of Trimark shall have approved or recommended any Acquisition Proposal; (d) be terminated by Trimark if the Board of Directors of AMVESCAP shall have failed to recommend or shall have withdrawn, modified or changed in a manner adverse to Trimark its approval or recommendation of this Agreement, the AMVESCAP Resolution or the Arrangement; (e) be terminated by AMVESCAP or Trimark if either Trimark Securityholder approval or AMVESCAP Shareholder approval shall not have been obtained by reason of the failure to obtain the required vote at the Trimark Meeting or the AMVESCAP Meeting, respectively; in each case, prior to the Outside Date. (4) If the Effective Date does not occur on or prior to the Outside Date, then this Agreement shall terminate. 43 -40- (5) If this Agreement is terminated in accordance with the foregoing provisions of this Section 6.3, no party shall have any further liability to perform its obligations hereunder except as provided in Section 6.4 and as otherwise contemplated hereby, and provided that, subject to Section 6.5, neither the termination of this Agreement nor anything contained in this Section 6.3(5) shall relieve any party from any liability for any breach by it of this Agreement, including from any inaccuracy in its representations and warranties and any non-performance by it of its covenants made herein. SECTION 6.4 BREAK AND OTHER FEES. (1) If: (a) AMVESCAP shall terminate this Agreement pursuant to Section 6.3(3)(c); or (b) either Trimark or AMVESCAP shall terminate this Agreement pursuant to Section 6.3(1) or (2) solely as a result of the failure to satisfy the conditions specified in either Section 5.1(a) or Section 5.1(b) in circumstances where the requisite Trimark Securityholder approval has not been obtained at the Trimark Meeting, and (x) an Acquisition Proposal has been made or an intention to make an Acquisition Proposal has been publicly announced by any person other than AMVESCAP prior to the Trimark Meeting and not withdrawn more than five days prior to the vote of the Trimark Securityholders and (y) Trimark enters into an agreement with respect to an Acquisition Proposal after the date hereof and prior to the expiration of 18 months following termination of this Agreement; then in any such case Trimark shall pay to AMVESCAP $100,000,000 in immediately available funds to an account designated by AMVESCAP. Such payment shall be due (A) in the case of a termination specified in clause (a), within one Business Day after written notice of termination by AMVESCAP, and (B) in the case of a termination specified in clause (b) at or prior to the consummation of the transaction referred to therein. Trimark shall not be obligated to make more than one payment pursuant to this Section 6.4(1). (2) If the holders of the Trimark Common Shares shall fail to approve the Arrangement (unless AMVESCAP shall have suffered a Material Adverse Change or AMVESCAP shall have made a misrepresentation at the date hereof or breached its covenant in Section 4.4 (g) or breached any other covenant under this Agreement in such a manner that, taking into account Sections 5.3(2) and 5.4, Trimark would be entitled to rely on the failure of a condition set forth in Sections 5.3(1)(a), (b) or (c) as a reason not to complete the Arrangement) at the Trimark Meeting, then, except in the circumstances 44 -41- contemplated in Section 6.4(1) above, on the first Business Day following the termination of this Agreement as a result thereof, Trimark shall pay to AMVESCAP $5,000,000 in immediately available funds to an account designated by AMVESCAP. Any payment due under Section 6.4(1) shall be reduced dollar-for-dollar by any payment previously made under this Section 6.4(2). (3) If the AMVESCAP Shareholders shall fail to approve the matters related to the Arrangement put forward for approval (unless Trimark shall have suffered a Material Adverse Change or Trimark shall have made a misrepresentation at the date hereof or breached a covenant under this Agreement in such a manner that, taking into account Section 5.4, AMVESCAP would be entitled to rely on the failure of a condition set forth in Sections 5.2(1)(a), (b) or (e) as a reason not to complete the Arrangement) at the AMVESCAP Meeting, then, except in the circumstances contemplated in Section 6.4(1) above, on the first Business Day following the termination of this Agreement as a result thereof, AMVESCAP shall pay to Trimark $5,000,000 in immediately available funds to an account designated by Trimark. SECTION 6.5 EFFECT OF BREAK FEE PAYMENT. For greater certainty, the parties hereto agree that if Trimark pays to AMVESCAP amounts required by Section 6.4(1) as a result of the occurrence of any of the events referenced in Section 6.4(1), AMVESCAP shall have no other remedy for any breach of this Agreement by Trimark , unless Trimark makes a claim against AMVESCAP for breach of a provision of this Agreement, in which circumstances the liability of Trimark to AMVESCAP for damages for claims in respect of breaches of this Agreement shall be subject to a maximum limit equal to the liability of AMVESCAP to Trimark for damages for claims in respect of breaches of this Agreement. For greater certainty, in no event shall Trimark be required to pay to AMVESCAP, whether pursuant to Section 6.4 or as a result of any liability of Trimark to AMVESCAP for damages for claims in respect of breaches by Trimark of this Agreement, in excess of $100,000,000 net of amounts owing to Trimark for damages for claims in respect of breaches by AMVESCAP of this Agreement. SECTION 6.6 REMEDIES. Subject to Section 6.5, the parties hereto acknowledge and agree that an award of money damages would be inadequate for any breach of this Agreement by any party or its representatives and any such breach would cause the non-breaching party irreparable harm. Accordingly, the parties hereto agree that, in the event of any breach or threatened breach of this Agreement by one of the parties, the non-breaching party will also be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance. Such remedies will not be the exclusive remedies for any breach of this 45 -42- Agreement but will be in addition to all other remedies available at law or equity to each of the parties. ARTICLE 7 GENERAL SECTION 7.1 NOTICES. All notices and other communications which may or are required to be given pursuant to any provision of this Agreement shall be given or made in writing and shall be deemed to be validly given if served personally or by telecopy, in each case addressed to the particular party at: (a) If to AMVESCAP, at: 11 Devonshire Square London, England EC2M 4Y2 Attention: Chairman and Chief Executive Officer Telecopier No.: (011) 44 207 454 3962 with a copy to: AMVESCAP 1315 Peachtree St. N.E. Suite 500 Atlanta, GA 30309 Attention: Neil Williams, General Counsel Telecopier No.: (404) 724-4280 with a copy to: Stikeman Elliott Box 85, Commerce Court West 199 Bay Street, 53rd Floor Toronto, Ontario M5L 1B9 Attention: John M. Stransman Telecopier No.: (416) 947-0866 46 -43- (b) If to Trimark at: Trimark Financial Corporation One First Canadian Place Suite 5600 Toronto, Ontario M5X 1E5 Attention: Chairman and Chief Executive Officer Telecopier No.: (416) 362-1640 with a copy to: Goodman Phillips & Vineberg 250 Yonge Street Suite 2400 Toronto, Ontario M5B 2M6 Attention: Dale Lastman Telecopier No.: (416) 597-4129 or at such other address of which any party may, from time to time, advise the other parties by notice in writing given in accordance with the foregoing. The date of receipt of any such notice shall be deemed to be the date of delivery or telecopying thereof. SECTION 7.2 ASSIGNMENT. No party hereto may assign its rights or obligations under this Agreement or the Arrangement, except that AMVESCAP may assign (provided AMVESCAP remains jointly and severally liable for its obligations hereunder) all or part of its rights or obligations to a lender for financing purposes or, with the consent of Trimark, not to be unreasonably withheld, to a wholly-owned subsidiary. SECTION 7.3 BINDING EFFECT. This Agreement and the Arrangement shall be binding upon and shall enure to the benefit of the parties hereto and their respective successors and permitted assigns and no third party shall have any rights hereunder. SECTION 7.4 WAIVER AND MODIFICATION. Trimark and AMVESCAP may waive or consent to the modification of, in whole or in part, any inaccuracy of any representation or warranty made to them hereunder or in any document to be delivered pursuant hereto and may waive or consent to the modification of any of the covenants herein contained for their respective benefit or waive or consent to the modification of any of the obligations of the other parties hereto. Any waiver or consent to the modification of any of the 47 -44- provisions of this Agreement, to be effective, must be in writing executed by the party granting such waiver or consent. SECTION 7.5 FURTHER ASSURANCES. Each party hereto shall, from time to time, and at all times hereafter, at the request of the other parties hereto, but without further consideration, do all such further acts and execute and deliver all such further documents and instruments as shall be reasonably required in order to fully perform and carry out the terms and intent hereof. SECTION 7.6 EXPENSES. (1) Subject to Section 6.4, the parties agree that all out-of-pocket expenses of the parties relating to the Arrangement and the transactions contemplated hereby, including legal fees, accounting fees, financial advisory fees, regulatory filing fees, stock exchange fees, all disbursements of advisors and printing and mailing costs, shall be paid by the party incurring such expenses. (2) Trimark represents and warrants to AMVESCAP that, except for any amounts owing to those financial advisers referred to in Section (c)(iii) of Schedule G by Trimark pursuant to and in accordance with the terms of written and executed agreements existing as at the date hereof and disclosed to AMVESCAP on or prior to the date hereof, no broker, finder or investment banker is or will be entitled to any brokerage, finder's or other fee or commission from Trimark or any subsidiary of Trimark in connection with the transactions contemplated hereby or by the Arrangement. SECTION 7.7 CONSULTATION. AMVESCAP and Trimark agree to consult with each other as to the general nature of any news releases or public statements with respect to this Agreement or the Arrangement, and, subject to applicable Laws to use their respective reasonable efforts not to issue any news releases or public statements inconsistent with the results of such consultations. Subject to applicable Laws, each party shall use its reasonable efforts to enable the other parties to review and comment on all such news releases prior to the release thereof. The parties agree to issue jointly the news release in the agreed form with respect to this Arrangement as soon as practicable following the execution of this Agreement. AMVESCAP and Trimark also agree to consult with each other in preparing and making any filings and communications in connection with any Regulatory Approvals and in seeking any third party consents under leases, joint ventures or other agreements. 48 -45- SECTION 7.8 GOVERNING LAWS. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as a Ontario contract. Each party hereby irrevocably attorns to the jurisdiction of the courts of the Province of Ontario in respect of all matters arising under or in relation to this Agreement. SECTION 7.9 TIME OF ESSENCE. Time shall be of the essence in this Agreement. SECTION 7.10 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above. AMVESCAP PLC By: /s/ Robert F. McCullough -------------------------- Authorized Signing Officer TRIMARK FINANCIAL CORPORATION By: /s/ Robert C. Krembil -------------------------- Authorized Signing Officer 49 SCHEDULE A ARRANGEMENT RESOLUTION SPECIAL RESOLUTION OF THE TRIMARK SECURITYHOLDERS BE IT RESOLVED THAT: 1. The arrangement (the "ARRANGEMENT") under Section 182 of the Business Corporations Act (Ontario) (the "OBCA") involving Trimark Financial Corporation ("TRIMARK"), as more particularly described and set forth in the Management Information Circular (the "CIRCULAR") of Trimark accompanying the notice of this meeting (as the Arrangement may be or may have been modified or amended) is hereby authorized, approved and adopted. 2. The plan of arrangement (the "PLAN OF ARRANGEMENT") involving Trimark, the full text of which is set out as Schedule B to the Merger Agreement (the "MERGER AGREEMENT") made between AMVESCAP PLC and Trimark (as the Plan of Arrangement may be or may have been modified or amended) is hereby authorized, approved and adopted. 3. Notwithstanding that this resolution has been passed (and the Arrangement adopted) by the shareholders of Trimark or that the Arrangement has been approved by the Superior Court of Justice (Ontario), the directors of Trimark are hereby authorized and empowered (a) to amend the Merger Agreement or the Plan of Arrangement to the extent permitted by the Merger Agreement, and (b) not to proceed with the Arrangement without further approval of the shareholders of Trimark, but only if the Merger Agreement is terminated in accordance with Article 6 thereof. 4. Any officer or director of Trimark is hereby authorized and directed for and on behalf of Trimark to execute, under the seal of Trimark or otherwise, and to deliver articles of arrangement and such other documents as are necessary or desirable to the Director under the OBCA in accordance with the Merger Agreement for filing. 5. Any officer or director of Trimark is hereby authorized and directed for and on behalf of Trimark to execute or cause to be executed, under the seal of Trimark or otherwise, and to deliver or cause to be delivered, all such other documents and instruments and to perform or cause to be performed all such other acts and things as in such person's opinion may be necessary or desirable to give full effect to the foregoing resolution and the matters authorized hereby, such determination to be conclusively evidenced by the 50 -2- execution and delivery of such document, agreement or instrument or the doing of any such act or thing. 51 SCHEDULE B PLAN OF ARRANGEMENT UNDER SECTION 182 OF THE BUSINESS CORPORATIONS ACT (ONTARIO) ARTICLE 1 INTERPRETATION SECTION 1.1 DEFINITIONS In this Plan of Arrangement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings: "AFFILIATE" has the meaning ascribed thereto in the Securities Act. "AGENT" means CIBC Mellon Trust Company at its offices set out in the Letter of Transmittal and Election Form and the Holdco Letter of Transmittal and Election Form. "AGGREGATE AMOUNT OF CASH" means the aggregate amount of cash that would be payable to Holdco Shareholders and to holders of Trimark Common Shares pursuant to sections 2.2(a) and 2.2(b) before giving effect to the pro-ration provisions of section 2.2(c). "AGGREGATE NUMBER OF SHARES" means the aggregate number of Exchangeable Shares and AMVESCAP Ordinary Shares that would be issuable to Holdco Shareholders and to holders of Trimark Common Shares pursuant to sections 2.2(a) and 2.2(b) after giving effect to the pro-ration provisions of section 2.2(c)(i) but before giving effect to the pro-ration provisions of section 2.2(c)(iii). "AGGREGATE PRINCIPAL AMOUNT OF DEBENTURES" means the aggregate principal amount of Debentures that would be issuable to Holdco Shareholders and to holders of Trimark Common Shares pursuant to sections 2.2(a) and 2.2(b) after giving effect to the pro-ration provisions of section 2.2(c)(ii) but before giving effect to the pro-ration provisions of section 2.2(c)(i). "AMALCO" means the corporation formed on the amalgamation of Trimark and all of the Holding Companies. "AMVESCAP" means AMVESCAP PLC, a corporation existing under the laws of England. 52 -2- "AMVESCAP CONTROL TRANSACTION" has the meaning ascribed thereto in the Exchangeable Share Provisions. "AMVESCAP ORDINARY SHARES" means the ordinary shares in the capital of AMVESCAP. "ARRANGEMENT" means an arrangement under section 182 of the OBCA on the terms and subject to the conditions set out in this Plan of Arrangement, subject to any amendments or variations thereto made in accordance with section 6.1 of the Merger Agreement or Article 6 or made at the direction of the Court. "ARRANGEMENT RESOLUTION" means the special resolution of the Trimark Securityholders, to be substantially in the form and content of Schedule A annexed to the Merger Agreement. "ARTICLES OF ARRANGEMENT" means the articles of arrangement of Trimark in respect of the Arrangement that are required by the OBCA to be sent to the Director after the Final Order is made. "BUSINESS DAY" means any day on which commercial banks are generally open for business in Toronto, Ontario and London, England, other than a Saturday, a Sunday or a day observed as a holiday in Toronto, Ontario or in London, England under applicable laws. "CALLCO" means AVZ Callco Inc., a company existing under the laws of Nova Scotia, which is a wholly-owned subsidiary of AMVESCAP. "CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a currency other than Canadian dollars (the "FOREIGN CURRENCY AMOUNT") at any date the product obtained by multiplying: (a) the Foreign Currency Amount, by (b) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the board of directors of AMVESCAP to be appropriate for such purpose. "CLOSING PRICE" means, in respect of an AMVESCAP Ordinary Share, the weighted average of the Canadian Dollar Equivalent of the trading prices of the AMVESCAP Ordinary Shares on the LSE for a period of five consecutive 53 -3- trading days ending on the day that is three Business Days prior to the Effective Date. "CLOSING PRICE RATIO" means the fraction the numerator of which is the Closing Price of an AMVESCAP Ordinary Share and the denominator of which is Cdn. $21.5078. "COMPANIES ACT" means the Companies Act (Nova Scotia), as amended. "CONSIDERATION PACKAGE" has the meaning ascribed thereto in section 2.2(b). "COURT" means the Superior Court of Justice (Ontario). "CURRENT MARKET PRICE" has the meaning ascribed thereto in the Exchangeable Share Provisions. "DEBENTURES" means the equity subordinated debentures of Exchangeco, containing the terms ascribed thereto in Schedule F annexed to the Merger Agreement. "DIRECTOR" means the Director appointed pursuant to section 278 of the OBCA. "DISSENT RIGHTS" has the meaning ascribed thereto in section 3.1. "DISSENTING SHAREHOLDER" means a holder of Trimark Common Shares who dissents in respect of the Arrangement in strict compliance with the Dissent Rights. "DIVIDEND AMOUNT" means an amount equal to, and in full satisfaction of, all declared and unpaid dividends on an Exchangeable Share held by a holder on any dividend record date which occurred prior to the date of purchase of such share by Callco from such holder. "EFFECTIVE DATE" means the date shown on the certificate of arrangement to be issued by the Director under the OBCA giving effect to the Arrangement. "EFFECTIVE TIME" means 12:01 a.m. on the Effective Date. "ELECTED" means elected in a duly completed Letter of Transmittal and Election Form or Holdco Letter of Transmittal and Election Form deposited with the Agent no later than the Election Deadline and, except where the term "election" is used with respect to elections and election forms under the Tax Act and provincial tax law, "ELECTS" and "ELECTION" shall have corresponding meanings. 54 -4- "ELECTION DEADLINE" means 5:00 p.m. (local time) at the place of deposit on the date which is two Business Days prior to the date of the Trimark Meeting. "EXCHANGE RATIO" means, subject to adjustment, if any, as provided herein, 1.25536 divided by the Closing Price Ratio; provided that if the Closing Price Ratio is less than 0.875, the Closing Price Ratio shall be deemed for purposes of this definition to be 0.875 and if the Closing Price Ratio is greater than 1.125 the Closing Price Ratio shall be deemed for purposes of this definition to be 1.125. "EXCHANGEABLE SHARES" means the non-voting exchangeable shares in the capital of Exchangeco, having the rights, privileges, restrictions and conditions set out in the Exchangeable Share Provisions. "EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions and conditions attaching to the Exchangeable Shares, which rights, privileges, restrictions and conditions shall be as set out in Appendix 1 hereto. "EXCHANGEABLE SHARE VOTING EVENT" has the meaning ascribed thereto in the Exchangeable Share Provisions. "EXCHANGECO" means AMVESCAP Inc., a corporation existing under the laws of Nova Scotia, which is a wholly-owned subsidiary of AMVESCAP. "EXCLUDED TRIMARK COMMON SHARES" means Trimark Common Shares held by Persons who, at the Effective Time, are Dissenting Shareholders and Trimark Common Shares, if any, held by AMVESCAP or any Affiliate thereof (including any Holding Company that becomes an Affiliate of AMVESCAP pursuant to section 2.2(a)). "FINAL ORDER" means the final order of the Court approving the Arrangement as such order may be amended by the Court at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed. "GOVERNMENT ENTITY" means any (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) self-regulatory organization or stock exchange, (c) any subdivision, agent, commission, board, or authority of any of the foregoing, or (d) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing. 55 -5- "HOLDCO AGREEMENT" means an agreement satisfactory to AMVESCAP, in its sole discretion, pursuant to which all of the holders of shares in the capital of a Holding Company agree to, among other things, transfer all of the shares in the capital of such company to Exchangeco under the Arrangement and agree to deposit with the Agent prior to the Election Deadline a duly completed Holdco Letter of Transmittal and Election Form. "HOLDCO ALTERNATIVE" means the option of all of the holders of shares in the capital of a holding company which is a holder of Trimark Common Shares to enter into a Holdco Agreement with AMVESCAP and to transfer all of the issued and outstanding shares in the capital of such company to Exchangeco under the Arrangement and to receive the consideration provided for in section 2.2. "HOLDCO LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of transmittal and election form for use by Holdco Shareholders. "HOLDCO SHARES" means, in respect of a Holding Company, all of the issued and outstanding shares in the capital of such Holding Company. "HOLDCO SHAREHOLDERS" means, in respect of a Holding Company, all of the holders of the Holdco Shares of such Holding Company. "HOLDERS" means, when used with reference to any shares or options, the holders of such shares or options, respectively, shown from time to time in the register maintained by or on behalf of the applicable corporation in respect thereof. "HOLDING COMPANY" means a company which is a holder of Trimark Common Shares and in respect of which all of the holders of shares in the capital of such company have validly exercised the Holdco Alternative and duly completed and deposited with the Agent prior to the Election Deadline a Holdco Letter of Transmittal and Election Form. "INTERIM ORDER" means the interim order of the Court, as the same may be amended, in respect of the Arrangement, as contemplated by section 2.3 of the Merger Agreement. "LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of transmittal and election form for use by holders of Trimark Common Shares (other than Holding Companies), in the form accompanying the Trimark Circular. "LIQUIDATION AMOUNT" has the meaning ascribed thereto in the Exchangeable Share Provisions. 56 -6- "LIQUIDATION CALL PURCHASE PRICE" has the meaning ascribed thereto in section 5.1(1). "LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in section 5.1(1). "LIQUIDATION DATE" has the meaning ascribed thereto in the Exchangeable Share Provisions. "LSE" means the London Stock Exchange plc or its successors. "MAXIMUM CASH CONSIDERATION" means the amount equal to Cdn.$7.50 times the Trimark Shares Outstanding. "MAXIMUM DEBENTURE CONSIDERATION" means the amount equal to Cdn.$13.00 times the Trimark Shares Outstanding, rounded down to the nearest Cdn.$1,000. "MAXIMUM NUMBER OF AMVESCAP ORDINARY SHARES" means the number equal to the Maximum Number of Shares times the aggregate number of AMVESCAP Ordinary Shares that would be issuable to Holdco Shareholders and to holders of Trimark Common Shares pursuant to sections 2.2(a) and 2.2(b) before giving effect to the pro-ration provisions of section 2.2(c), divided by the Aggregate Number of Shares. "MAXIMUM NUMBER OF EXCHANGEABLE SHARES" means the number equal to the Maximum Number of Shares times the aggregate number of Exchangeable Shares that would be issuable to Holdco Shareholders and to holders of Trimark Common Shares pursuant to sections 2.2(a) and 2.2(b) before giving effect to the pro-ration provisions of section 2.2(c), divided by the Aggregate Number of Shares. "MAXIMUM NUMBER OF SHARES" means the number equal to the Exchange Ratio times the fraction the numerator of which is the difference between (i) the amount equal to Cdn. $19.50 times the Trimark Shares Outstanding and (ii) the aggregate principal amount of Debentures issuable under the Arrangement (for greater certainty, after giving effect to the pro-ration provisions of section 2.2 (c)(i)), and the denominator of which is Cdn. $27.00, rounded down to the nearest whole number. "MERGER AGREEMENT" means the amended and restated merger agreement made as of May 9, 2000 between AMVESCAP and Trimark, as may be further amended, supplemented and/or restated in accordance therewith prior to the Effective Date, providing for, among other things, the Arrangement. "OBCA" means the Business Corporations Act (Ontario), as amended. 57 -7- "PERSON" includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Governmental Entity, syndicate or other entity. "REDEMPTION CALL PURCHASE PRICE" has the meaning ascribed thereto in section 5.2(a). "REDEMPTION CALL RIGHT" has the meaning ascribed thereto in section 5.2(a). "REDEMPTION DATE" has the meaning ascribed thereto in the Exchangeable Share Provisions. "REPLACEMENT OPTION" has the meaning ascribed thereto in section 2.2(d). "SECURITIES ACT" means the Securities Act (Ontario) and the rules, regulations and policies made thereunder, as amended. "SPECIAL VOTING SHARE" means the Special Voting Share of AMVESCAP having substantially the rights, privileges, restrictions and conditions described in the Voting and Exchange Trust Agreement. "SHARE FRACTION" has the meaning ascribed thereto in section 2.2(b) "STAMP TAXES" means all stamp, registration and transfer taxes and duties or their equivalents in all jurisdictions where such taxes and duties are payable as a result of any of the transactions contemplated by this Plan of Arrangement including, without limitation, United Kingdom stamp duty and stamp duty reserve tax. "SUBSIDIARY" means, with respect to a specified body corporate, any body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body corporate and shall include any body corporate, partnership, joint venture or other entity over which it exercises direction or control or which is in a like relation to a subsidiary. "TAX ACT" means the Income Tax Act (Canada) and the rules, regulations and policies made thereunder, as amended. "TRANSFER AGENT" has the meaning ascribed thereto in section 5.1(2). 58 -8- "TRIMARK" means Trimark Financial Corporation, a corporation existing under the laws of Ontario. "TRIMARK CIRCULAR" means the management information circular, and accompanying notice of the Trimark Meeting and including all appendices thereto, to be sent to Trimark Securityholders in connection with the Trimark Meeting. "TRIMARK COMMON SHARES" means the outstanding common shares in the capital of Trimark. "TRIMARK MEETING" means the annual and special meeting of Trimark Securityholders, including any adjournment or postponement thereof, to be called and held in accordance with the Interim Order to consider the Arrangement. "TRIMARK MEETING DATE" means the date of the Trimark Meeting. "TRIMARK OPTIONS" means the Trimark Common Share purchase options granted under the Trimark Stock Option Plan. "TRIMARK SECURITYHOLDERS" means the holders of Trimark Common Shares and Trimark Options. "TRIMARK SHARES OUTSTANDING" means the number of Trimark Common Shares outstanding at the Effective Time. "TRIMARK STOCK OPTION PLAN" means the Executive Stock Option Plan established by Trimark's board of directors on February 25, 1992, as amended. "TRUSTEE" means the trustee to be chosen by AMVESCAP, acting reasonably, to act as trustee under the Voting and Exchange Trust Agreement, being a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all the provinces of Canada, and any successor trustee appointed under the Voting and Exchange Trust Agreement. "UKLA" means the Financial Services Authority in its capacity as the competent authority for the purposes of Part IV of the Financial Services Act 1986 of the United Kingdom (or any successor Act). "VOTING AND EXCHANGE TRUST AGREEMENT" means an agreement to be made between AMVESCAP, Exchangeco and the Trustee in connection with the Plan of Arrangement substantially in the form and content of Schedule E 59 -9- annexed to the Merger Agreement, with such changes thereto as the parties to the Merger Agreement, acting reasonably, may agree. SECTION 1.2 INTERPRETATION NOT AFFECT BY HEADINGS, ETC. The division of this Plan of Arrangement into Articles, Sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references to an "Article" or "Section" followed by a number and/or a letter refer to the specified Article or Section of this Plan of Arrangement. The terms "this Plan of Arrangement", "hereof", "herein" and "hereunder" and similar expressions refer to this Plan of Arrangement (including the Appendix hereto) and not to any particular Article, Section or other portion hereof and include any agreement or instrument supplementary or ancillary hereto. SECTION 1.3 NUMBER, ETC. Unless the context otherwise requires, words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders. ARTICLE 2 ARRANGEMENT SECTION 2.1 BINDING EFFECT This Plan of Arrangement will become effective at, and be binding at and after, the Effective Time on (i) Trimark, (ii) AMVESCAP, (iii) Callco, (iv) Exchangeco, (v) each Holding Company, (vi) all holders and all beneficial holders of Trimark Common Shares and Trimark Options, (vii) all holders and all beneficial holders of Exchangeable Shares and Debentures from time to time, and (viii) all Holdco Shareholders. SECTION 2.2 ARRANGEMENT Commencing at the Effective Time, the following shall occur and shall be deemed to occur in the following order without any further act or formality: (a) with respect to each Holding Company, its Holdco Shares will be transferred by its Holdco Shareholders, without any further act or formality on their part, and free and clear of all liens, claims and encumbrances, to Exchangeco in exchange for the consideration that would have been received by such Holding Company pursuant to sections 2.2(b) and 2.2(c) if such Holding Company had deposited with the Agent prior to the Election Deadline a duly completed Letter of Transmittal and Election Form specifying the same elections as set out 60 -10- in the Holdco Letter of Transmittal and Election Form deposited by such Holding Company's Holdco Shareholders, and the names of its Holdco Shareholders will be removed from the register of holders of such Holding Company and, subject to Article 4, added to the register of holders of the securities, if any, comprising all or part of the consideration received by such Holdco Shareholders for such transfer and Exchangeco will be recorded as the registered holder of such Holdco Shares so transferred and will be deemed to be the legal and beneficial owner of such Holdco Shares; (b) subject to the pro-ration adjustments set out in section 2.2(c), each Trimark Common Share (other than an Excluded Trimark Common Share) will be transferred to, and acquired by, Exchangeco, without any further act or formality on the part of the holder of Trimark Common Shares or Exchangeco and free and clear of all liens, claims and encumbrances, in exchange for, at the election (or deemed election) of the holder of Trimark Common Shares either: (i) Cdn. $27.00 of principal amount of Debentures; (ii) Cdn. $27.00 in cash; (iii) such number of fully paid and non-assessable Exchangeable Shares as is equal to the Exchange Ratio; (iv) such number of fully paid AMVESCAP Ordinary Shares as is equal to the Exchange Ratio; or (v) a combination of the foregoing (a "CONSIDERATION PACKAGE") with the aggregate value of the cash portion and the Debenture portion (as determined below) to be less than or equal to Cdn. $27.00 and the total number of Exchangeable Shares and/or AMVESCAP Ordinary Shares (if any) as determined below; payable, in each case, in accordance with Article 4, and the name of each such holder of Trimark Common Shares will be removed from the register of holders of Trimark Common Shares and added to the register of holders of the securities, if any, comprising all or part of the consideration to be received by such holder for such transfer, and Exchangeco will be recorded as the registered holder of the Trimark Common Shares so transferred and will be deemed to be the legal and beneficial owner of such Trimark Common Shares. For greater certainty, the consideration components of each Consideration Package (if any) received by any holder of Trimark 61 -11- Common Shares or any Holdco Shareholder, after taking into account the pro-rations pursuant to section 2.2(c), shall be allocated as consideration for each Trimark Common Share or Holdco Share, as the case may be, on a pro rata basis unless such holder of Trimark Common Shares notifies Exchangeco in writing (at the time such holder deposits its Letter of Transmittal and Election Form with the Agent) that it wishes to segregate the components of the Consideration Package to different Trimark Common Shares owned by such holder in the manner set out in such notice. For the purpose of determining the composition of the Consideration Package to be received by a holder of Trimark Common Shares or by a Holdco Shareholder, after taking into account the prorations pursuant to section 2.2(c), (A) the cash portion (if any) shall be valued as cash, (B) the Debenture portion (if any) shall be valued at par, and (C) the total Exchangeable Share and/or AMVESCAP Ordinary Share portion (if any) shall be comprised of that number of shares as is equal to the Share Fraction multiplied by the Exchange Ratio, where the "SHARE FRACTION" means the fraction the numerator of which is equal to $27.00 less the value of the cash portion and the value of the Debenture portion forming part of such Consideration Package, and the denominator of which is $27.00. If a holder of Trimark Common Shares (other than Excluded Trimark Common Shares) does not make an election or makes an incomplete or invalid election, such holder shall be deemed to have elected to receive such number of Exchangeable Shares as is equal to the Exchange Ratio for each Trimark Common Share held by such holder; (c) the consideration which each holder of Trimark Common Shares and each Holdco Shareholder has elected (or been deemed to have elected) to receive in exchange for such Person's Trimark Common Shares or Holdco Shares, as the case may be, shall be subject to adjustment and pro-ration on the following bases: (i) if the Aggregate Principal Amount of Debentures (A) is less than or equal to $100,000,000, then no Debentures will be issuable under the Arrangement and each holder of Trimark Common Shares and each Holdco Shareholder who has elected to receive all or part of the consideration for such Person's Trimark Common Shares or Holdco Shares, as the case may be, in the form of Debentures shall be entitled to receive that number of Exchangeable Shares that such Person would have been entitled to receive if such Person had elected to receive (x) 62 -12- no Debentures, (y) the cash, if any, such Person will be entitled to receive pursuant to section 2.2(b) after giving effect to the pro-ration provisions of section 2.2(c)(ii), and (z) the number of AMVESCAP Ordinary Shares, if any, such Person will be entitled to receive pursuant to section 2.2(b), after giving effect to the pro-ration provisions of section 2.2(c)(iii), or (B) exceeds the Maximum Debenture Consideration, then the principal amount of Debentures issuable under the Arrangement to each holder of Trimark Common Shares and each Holdco Shareholder who had elected to receive all or part of the consideration for such Person's Trimark Common Shares or Holdco Shares, as the case may be, in the form of Debentures shall be prorated (based on the fraction equal to the Maximum Debenture Consideration divided by the Aggregate Principal Amount of Debentures) among all such Persons so that the aggregate principal amount of Debentures issuable to all holders of Trimark Common Shares and to all Holdco Shareholders under the Arrangement shall be equal to the Maximum Debenture Consideration and, subject to section 4.6, each such Person (A) shall be entitled to receive Debentures equal to the principal amount of Debentures issuable to such Person after giving effect to the pro-ration provisions of this section 2.2(c)(i) and (B) subject to the pro-ration provisions of section 2.2(c)(iii), shall be entitled to receive that number of Exchangeable Shares that such Person would have been entitled to receive if such Person had elected to receive (x) such aggregate principal amount of Debentures, (y) the cash, if any, such Person will be entitled to receive pursuant to section 2.2(b) after giving effect to the pro-ration provisions of section 2.2(c)(ii), and (z) the number of AMVESCAP Ordinary Shares, if any, such Person will be entitled to receive pursuant to section 2.2(b) after giving effect to the pro-ration provisions of section 2.2(c)(iii); (ii) if the Aggregate Amount of Cash exceeds the Maximum Cash Consideration, then the amount of cash payable under the Arrangement to each holder of Trimark Common Shares and to each Holdco Shareholder who has elected to receive all or part of the consideration for such Person's Trimark Common Shares or Holdco Shares, as the case may be, in the form of cash shall be prorated (based on the fraction equal to the Maximum Cash Consideration divided by the Aggregate Amount of Cash) among all such Persons so that the aggregate amount of cash 63 -13- payable to all holders of Trimark Common Shares and to all Holdco Shareholders under the Arrangement shall be equal to the Maximum Cash Consideration and each such Person (A) shall be entitled to receive cash equal to the amount of cash payable to such Person after giving effect to the pro-ration provisions of this section 2.2(c) and, subject to section 4.6, (B) if such Person has made a further election to receive Exchangeable Shares in such event or has made no further election, such Person shall be entitled to receive that number of Exchangeable Shares that such Person would have been entitled to receive if such Person had elected to receive (x) such amount of cash, (y) the aggregate principal amount of Debentures, if any, such Person will be entitled to receive pursuant to section 2.2(b) after giving effect to the pro-ration provisions of section 2.2(c)(i), and (z) the number of AMVESCAP Ordinary Shares, if any, such Person had elected to receive pursuant to section 2.2(b), or (C) if such Person has made a further election to receive Debentures in such event, subject to the pro-ration provisions of section 2.2(c)(i), such Person shall be entitled to receive Debentures in an aggregate principal amount equal to the amount of cash such Person had elected to receive less the amount of cash such Person will receive after giving effect to the pro-ration provisions of this section 2.2(c)(ii); (iii) if the Aggregate Number of Shares exceeds the Maximum Number of Shares, then (A) the number of Exchangeable Shares issuable under the Arrangement to each holder of Trimark Common Shares and to each Holdco Shareholder who has elected (or is deemed to have elected or pursuant to the proration provisions of section 2.2(c)(i) is entitled) to receive all or part of the consideration for such Person's Trimark Common Shares or Holdco Shares, as the case may be, in the form of Exchangeable Shares shall be prorated (based on the fraction equal to the Maximum Number of Exchangeable Shares divided by the Aggregate Number of Shares) among all such Persons so that the number of Exchangeable Shares issuable to all holders of Trimark Common Shares and to all Holdco Shareholders under the Arrangement shall be equal to the Maximum Number of Exchangeable Shares and, subject to section 4.6, each such Person (w) shall be entitled to receive that number of Exchangeable Shares equal to the number of Exchangeable Shares issuable to such Person after giving effect to the pro-ration provisions of this section 2.2(c), and (x) shall be entitled 64 -14- to receive an additional amount of cash equal to (1) the difference between the number of Exchangeable Shares such Person elected to receive pursuant to section 2.2(b) and the number of Exchangeable Shares such Person will be entitled to receive after giving effect to the pro-ration provisions of this section 2.2(c)(iii), divided by (2) the Exchange Ratio, and multiplied by (3) Cdn. $27.00; and (B) the number of AMVESCAP Ordinary Shares issuable under the Arrangement to each holder of Trimark Common Shares and to each Holdco Shareholder who has elected to receive all or part of the consideration for such Person's Trimark Common Shares or Holdco Shares, as the case may be, in the form of AMVESCAP Ordinary Shares shall be prorated (based on the fraction equal to the Maximum Number of AMVESCAP Ordinary Shares divided by the Aggregate Number of Shares) among all such Persons so that the number of AMVESCAP Ordinary Shares issuable to all holders of Trimark Common Shares and to all Holdco Shareholders under the Arrangement shall be equal to the Maximum Number of AMVESCAP Ordinary Shares and, subject to section 4.6, each such Person (y) shall be entitled to receive AMVESCAP Ordinary Shares equal to the number of AMVESCAP Ordinary Shares issuable to such Person after giving effect to the pro-ration provisions of this section 2.2(c), and (z) shall be entitled to receive an additional amount of cash equal to (1) the difference between the number of AMVESCAP Ordinary Shares such Person elected to receive pursuant to section 2.2(b) and the number of AMVESCAP Ordinary Shares such Person will be entitled to receive after giving affect to the pro-ration provisions of this section 2.2(c)(iii), divided by (2) the Exchange Ratio, and multiplied by (3) Cdn. $27.00. (d) each Trimark Option that has not been duly exercised prior to the Effective Time shall be exchanged for an option (a "REPLACEMENT OPTION") to purchase the number of AMVESCAP Ordinary Shares equal to the product of the Exchange Ratio multiplied by the number of Trimark Common Shares that may be purchased as if such Trimark Option were exercisable and exercised immediately prior to the Effective Time. Such Replacement Option shall provide for an exercise price per AMVESCAP Ordinary Share equal to the exercise price per Trimark Common Share of such Trimark Option immediately prior to the Effective Time divided by the Exchange Ratio, provided that in no circumstance shall the exercise price per AMVESCAP Ordinary Share be less than 25 pence and if the calculation results in an exercise price 65 -15- less than 25 pence, the exercise price shall be deemed to be 25 pence per AMVESCAP Ordinary Share. If the foregoing calculation results in a Replacement Option being exercisable for a fraction of an AMVESCAP Ordinary Share, then the number of AMVESCAP Ordinary Shares subject to such Replacement Option shall be rounded down to the next whole number of AMVESCAP Ordinary Shares and the total exercise price for the Replacement Option shall be reduced by the exercise price of the fractional AMVESCAP Ordinary Share, provided that in no circumstance shall the exercise price per AMVESCAP Ordinary Share be less than 25 pence and if the calculation results in an exercise price less than 25 pence, the exercise price shall be deemed to be 25 pence per AMVESCAP Ordinary Share. The term to expiry, conditions to and manner of exercising, vesting schedule and all other terms and conditions of such Replacement Option will be the same as the terms and conditions of such Trimark Option, and any document or agreement previously evidencing such Trimark Option shall thereafter evidence and be deemed to evidence such Replacement Options. Notwithstanding the foregoing, the holder of a Trimark Option may, at his or her sole option, notify AMVESCAP in writing on or before the Effective Time that he or she wishes to increase the exercise price per AMVESCAP Ordinary Share for his or her Replacement Option in the event that the value of such Replacement Option immediately after the Effective Time (measured as the difference between the closing price of the AMVESCAP Ordinary Shares on the LSE on the Effective Date and the exercise price for such shares pursuant to such Replacement Option) exceeds the value of the Trimark Option immediately before the Effective Time (measured as the difference between the closing price of the Trimark Common Shares underlying such Trimark Option on The Toronto Stock Exchange Inc. on the trading day immediately preceding the Effective Date and the exercise price for such shares pursuant to such Trimark Option) to the amount necessary to make the value of such Replacement Option immediately after the Effective Time equal to the value of such Trimark Option immediately before the Effective Time and in the event such notice is given, the exercise price per AMVESCAP Ordinary Share under such Replacement Option shall be deemed to be equal to such amount; provided that in no circumstances shall the exercise price per AMVESCAP Ordinary Share be less than 25 pence; (e) AMVESCAP shall issue to and deposit with the Trustee the Special Voting Share, in consideration of the payment to AMVESCAP by a non-U.K. resident of one (1) pound sterling, to be thereafter held of 66 -16- record by the Trustee as trustee for and on behalf of, and for the use and benefit of, the holders of the Exchangeable Shares in accordance with the Voting and Exchange Trust Agreement; and (f) if there is one or more Holding Companies, Trimark and all of the Holding Companies shall amalgamate and continue as one corporation under the OBCA, Amalco, with the effect described below unless and until otherwise determined in the manner required by law or by Amalco, its directors or shareholders, and the following provisions shall apply: (i) NAME. The name of Amalco shall be Trimark Financial Corporation/Societe Financiere Trimark; (ii) REGISTERED OFFICE. The registered office of Amalco shall be located in the City of Toronto in the Province of Ontario. The address of the registered office of Amalco shall be 5140 Yonge Street, Suite 900, Toronto, Ontario, M2N 6X7; (iii) BUSINESS AND POWERS. There shall be no restrictions on the business that Amalco may carry on or on the powers it may exercise; (iv) AUTHORIZED SHARE CAPITAL. Amalco shall be authorized to issue an unlimited number of common shares; (v) SHARE CONVERSION. Each share in the capital of Trimark and each share in the capital of each Holding Company shall be converted into one common share in the capital of Amalco; (vi) SHARE RESTRICTIONS. (A) TRANSFER. The transfer of shares in the capital of Amalco shall be restricted in that no share shall be transferred without either (i) the consent of the directors of Amalco expressed by resolution passed by the board of directors or by an instrument or instruments in writing signed by all of such directors, or (ii) the consent of the holders of shares in the capital of Amalco to which are attached more than 50% of the voting rights attaching to all shares for the time being outstanding entitled to vote at such time expressed by a resolution passed by such shareholders at a meeting duly called and constituted for that purpose or by an instrument or instruments in writing signed by all of such shareholders; 67 -17- (B) NUMBER OF SHAREHOLDERS. The number of shareholders of Amalco, exclusive of Persons who are in its employment and exclusive of Persons who, having been formerly in the employment of Amalco, were, while in that employment, and have continued after termination of that employment to be, shareholders of such Amalco, is limited to not more than 50, two or more Persons who are the joint registered owners of one or more shares in the capital of Amalco being counted as one shareholder; and (C) PUBLIC DISTRIBUTIONS. Any invitation to the public to subscribe for any securities of Amalco is prohibited; (vii) NUMBER OF DIRECTORS. The number of directors of Amalco shall be not less than one (1) and not more than ten (10) as the shareholders of Amalco may from time to time determine by special resolution or, if empowered to do so by special resolution, as the directors of Amalco may from time to time determine; and (viii) INITIAL DIRECTORS. The initial directors of Amalco shall be Robert Hain, Robert Krembil, Robert McCullough and Philip Taylor; (ix) BY-LAWS. The by-laws of Amalco shall be the same as the by-laws of AIM Funds Management Inc.; and (x) STATED CAPITAL. For the purposes of the OBCA, there shall be added to the stated capital of Amalco, the aggregate amount of the stated capital of the shares of Trimark and the shares of each Holding Company other than shares of a Holding Company held by another Holding Company. SECTION 2.3 ELECTIONS (a) Each Person who, at or prior to the Election Deadline, is a holder of record of Trimark Common Shares or Holdco Shares will be entitled, with respect to their shares, to make an election to receive (i) cash, (ii) Debentures, (iii) Exchangeable Shares, (iv) AMVESCAP Ordinary Shares, or (v) a Consideration Package (in which case a holder of Trimark Common Shares or a Holdco Shareholder, as the case may be, must designate the percentage of the Consideration Package to be comprised of each of the foregoing components), in exchange for such Person's Trimark Common Shares or Holdco Shares, as the case may be, all on the basis set forth herein (including the provisions of section 68 -18- 2.2) and in the Letter of Transmittal and Election Form or the Holdco Letter of Transmittal and Election Form, as the case may be. (b) Holders of Trimark Common Shares and Holdco Shareholders, other than any such Person who is exempt by the provisions of the Tax Act from tax under the Tax Act, who are entitled to receive Exchangeable Shares under the Arrangement shall be entitled to make an income tax election pursuant to subsection 85(1) of the Tax Act or, if the Person is a partnership, subsection 85(2) of the Tax Act (and in each case, where applicable, the analogous provisions of provincial income tax law) and, where applicable, an election under section 57.9 of the Corporations Tax Act (Ontario) (or such similar elections as may be applicable under the analogous provisions of any other provincial corporation tax law) with respect to the transfer of their Trimark Common Shares or their Holdco Shares, as the case may be, to Exchangeco by providing two signed copies of the necessary prescribed election forms to the Agent within 90 days following the Effective Date, duly completed with the details of the number of Trimark Common Shares or Holdco Shares transferred and the applicable agreed amounts for the purposes of such elections. Thereafter, subject to the election forms being correct and complete and complying with the provisions of the Tax Act (or applicable provincial income or corporate tax law), the forms will be signed by Exchangeco and returned to such Persons within 30 days after the receipt thereof by the Agent for filing with the Canada Customs and Revenue Agency (or the applicable provincial taxing authority). Exchangeco will not be responsible for the proper completion of any election form and, except for Exchangeco's obligation to return duly completed election forms which are received by the Agent within 90 days of the Effective Date, within 30 days after the receipt thereof by the Agent, Exchangeco will not be responsible for any taxes, interest or penalties resulting from the failure by a holder of Trimark Common Shares or by a Holdco Shareholder to properly complete or file the election forms in the form and manner and within the time prescribed by the Tax Act (or any applicable provincial legislation). In its sole discretion, Exchangeco may choose to sign and return an election form received more than 90 days following the Effective Date, but Exchangeco will have no obligation to do so. SECTION 2.4 ADJUSTMENTS TO EXCHANGE RATIO The Exchange Ratio shall be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into AMVESCAP Ordinary Shares or Trimark Common 69 -19- Shares, other than stock dividends paid in lieu of ordinary course dividends), reorganization, recapitalization or other like change with respect to AMVESCAP Ordinary Shares or Trimark Common Shares occurring after the date of the Merger Agreement and prior to the Effective Time. SECTION 2.5 REGISTRATION REQUIREMENTS Notwithstanding sections 2.2, 4.3 and 4.4 but subject to the further provisions of this section 2.5, no Exchangeable Shares, Debentures or AMVESCAP Ordinary Shares shall be issued or transferred to any holder of Trimark Common Shares or any Holdco Shareholder if, as a result thereof, there would be a requirement to file a registration statement with the Securities and Exchange Commission in the United States or ongoing disclosure or other requirements in the United States and, in such event, in lieu of the Exchangeable Shares, Debentures or AMVESCAP Ordinary Shares such Person would otherwise be entitled to receive, such Person shall be entitled to receive a cash payment equal to the net proceeds (after expenses) received by the Agent upon the sale of such Exchangeable Shares, Debentures or AMVESCAP Ordinary Shares and the Agent shall sell such Exchangeable Shares, Debentures or AMVESCAP Ordinary Shares promptly after the Effective Date and after receipt of the certificates representing such holder's Trimark Common Shares or Holdco Shares, as the case may be, and a duly completed Letter of Transmittal and Election Form or a Holdco Letter of Transmittal and Election Form, as applicable, and such other documents and instruments as the Agent may reasonably require. ARTICLE 3 RIGHTS OF DISSENT SECTION 3.1 RIGHTS OF DISSENT Holders of Trimark Common Shares may exercise rights of dissent with respect to such shares pursuant to and in the manner set forth in section 185 of the OBCA and this section 3.1 (the "DISSENT RIGHTS") in connection with the Arrangement; provided that, notwithstanding subsection 185(6) of the OBCA, the written objection to the Arrangement Resolution referred to in subsection 185(6) of the OBCA must be received by Trimark not later than 5:00 p.m. (Toronto time) on the Business Day preceding the Trimark Meeting; and provided further, that notwithstanding the provisions of subsection 185(14) of the OBCA, holders of Trimark Common Shares who duly exercise such rights of dissent and who: (a) are ultimately determined to be entitled to be paid fair value for their Trimark Common Shares, shall be deemed to have transferred such Trimark Common Shares as of the Effective Time, without any further act or formality and free and clear of all liens, claims and encumbrances to Exchangeco in consideration for a payment of cash 70 -20- from Exchangeco equal to such fair value and such shares shall be cancelled as of the Effective Time; or (b) are ultimately determined not to be entitled, for any reason, to be paid fair value for their Trimark Common Shares, shall be deemed to have participated in the Arrangement, as of the Effective Time, on the same basis as a non-dissenting holder of Trimark Common Shares who did not make an election and shall be entitled to receive Exchangeable Shares on the basis determined in accordance with sections 2.2(b) and 2.2(c); but in no case shall AMVESCAP, Callco, Exchangeco, the Agent or any other Person be required to recognize any Dissenting Shareholder as a holder of Trimark Common Shares after the Effective Time, and the name of each Dissenting Shareholder shall be deleted from the registers of holders of Trimark Common Shares at the Effective Time. ARTICLE 4 CERTIFICATES AND FRACTIONAL SHARES SECTION 4.1 PAYMENT OF CASH At or promptly after the Effective Time, Exchangeco shall deposit with the Agent, for the benefit of the holders of Trimark Common Shares and of the Holdco Shareholders, cash in the amount of the Maximum Cash Consideration. Upon surrender to the Agent for cancellation of a certificate which immediately prior to the Effective Time represented Trimark Common Shares or Holdco Shares that were transferred for cash under the Arrangement, together with a duly completed Letter of Transmittal and Election Form or a Holdco Letter of Transmittal and Election Form, as the case may be, and such other documents and instruments as the Agent may reasonably require, the holder of such surrendered certificate shall be entitled to receive, and after the Effective Time the Agent shall deliver to such Person, the amount of cash such Person is entitled to receive under the Arrangement (less any amounts withheld pursuant to section 4.9), and any certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of such Trimark Common Shares which was not registered in the transfer records of Trimark, the amount of cash payable for such Trimark Common Shares under the Arrangement may be delivered to the transferee if the certificate representing such Trimark Common Shares is presented to the Agent, accompanied by all documents required to evidence and effect such transfer. Until surrendered as contemplated by this section 4.1, each certificate which immediately prior to the Effective Time represented one or more outstanding Trimark Common Shares that, under the Arrangement, were exchanged for cash pursuant to section 2.2 shall be deemed at all times after the Effective Time to represent only the right to receive upon such 71 -21- surrender the cash payment contemplated by this section 4.1, less any amounts withheld pursuant to section 4.9. SECTION 4.2 ISSUANCE OF CERTIFICATES REPRESENTING DEBENTURES At or promptly after the Effective Time, Exchangeco shall deposit with the Agent, for the benefit of the holders of Trimark Common Shares and of the Holdco Shareholders, certificates representing Debentures with an aggregate principal amount equal to the aggregate principal amount of Debentures issuable under the Arrangement which shall not be less than Cdn. $100,000,000 and shall not exceed the Maximum Debenture Consideration. Upon surrender (on or prior to the Election Deadline) to the Agent for cancellation of a certificate which immediately prior to the Effective Time represented Trimark Common Shares or Holdco Shares that were transferred for Debentures under the Arrangement, together with a duly completed Letter of Transmittal and Election Form or a Holdco Letter of Transmittal and Election Form, as the case may be, and such other documents and instruments as the Agent may reasonably require, the holder of such surrendered certificate shall be entitled to receive, and after the Effective Time the Agent shall deliver to such Person, certificates registered in the name of such Person representing the principal amount of Debentures which such Person is entitled to receive (together with any interest with respect thereto pursuant to section 4.5 and any cash in lieu of Debentures with a principal amount less than Cdn.$1,000 pursuant to section 4.6, less any amounts withheld pursuant to section 4.9), and any certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of such Trimark Common Shares which was not registered in the transfer records of Trimark, the certificates representing the principal amount of Debentures issuable in exchange for such Trimark Common Shares may be registered in the name of and issued to the transferee if the certificate representing such Trimark Common Shares is presented to the Agent, accompanied by all documents required to evidence and effect such transfer. SECTION 4.3 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES At or promptly after the Effective Time, Exchangeco shall deposit with the Agent, for the benefit of the holders of Trimark Common Shares and of the Holdco Shareholders, certificates representing that number of whole Exchangeable Shares issuable under the Arrangement. Upon surrender to the Agent for cancellation of a certificate which immediately prior to the Effective Time represented Trimark Common Shares or Holdco Shares that were transferred for Exchangeable Shares under the Arrangement, together with a duly completed Letter of Transmittal and Election Form or a Holdco Letter of Transmittal and Election Form, as the case may be, and such other documents and instruments as the Agent may reasonably require, the holder of such surrendered certificate shall be entitled to receive, and after the Effective Time the Agent shall deliver to such Person, certificates registered in the name of such Person representing that number of Exchangeable Shares which 72 -22- such Person is entitled to receive (together with any dividends or distributions with respect thereto pursuant to section 4.5 and any cash in lieu of fractional Exchangeable Shares pursuant to section 4.6, less any amounts withheld pursuant to section 4.9), and any certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of such Trimark Common Shares which was not registered in the transfer records of Trimark, certificates representing the number of Exchangeable Shares issuable in exchange for such Trimark Common Shares may be registered in the name of and issued to the transferee if the certificate representing such Trimark Common Shares is presented to the Agent, accompanied by all documents required to evidence and effect such transfer. Until surrendered as contemplated by this section 4.3, each certificate which immediately prior to the Effective Time represented one or more outstanding Trimark Common Shares that, under the Arrangement, were exchanged for Exchangeable Shares pursuant to section 2.2 shall be deemed at all times after the Effective Time to represent only the right to receive upon such surrender (i) a certificate representing the Exchangeable Shares as contemplated by this section 4.3, (ii) a cash payment in lieu of any fractional Exchangeable Shares as contemplated by section 4.6 and (iii) any dividends or distributions with a record date after the Effective Time theretofore paid or payable with respect to the Exchangeable Shares as contemplated by section 4.5, in each case less any amounts withheld pursuant to section 4.9. SECTION 4.4 EXCHANGE OF CERTIFICATES FOR AMVESCAP ORDINARY SHARES At or promptly after the Effective Time, Exchangeco shall deposit or cause the deposit with the Agent, for the benefit of the holders of Trimark Common Shares and of the Holdco Shareholders, certificates representing that whole number of AMVESCAP Ordinary Shares issuable under the Arrangement. Upon surrender (on or prior to the Election Deadline) to the Agent for cancellation of a certificate which immediately prior to the Effective Time represented outstanding Trimark Common Shares or Holdco Shares that were transferred for AMVESCAP Ordinary Shares under the Arrangement, together with a duly completed Letter of Transmittal and Election Form or a Holdco Letter of Transmittal and Election Form, as the case may be, and such other documents and instruments as the Agent may reasonably require, the holder of such surrendered certificate shall be entitled to receive, and after the Effective Time the Agent shall deliver to such Person, a certificate representing that number of AMVESCAP Ordinary Shares which such Person is entitled to receive (together with any dividends or distributions with respect thereto pursuant to section 4.5 and any cash in lieu of fractional AMVESCAP Ordinary Shares pursuant to section 4.6, less any amounts withheld pursuant to section 4.9), and any certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of such Trimark Common Shares which was not registered in the transfer records of Trimark, the certificates representing the number of AMVESCAP Ordinary Shares issuable in exchange for such Trimark Common Shares may be registered in the name of and issued to the transferee if the certificate 73 -23- representing such Trimark Common Shares is presented to the Agent on or prior to the Election Deadline, accompanied by a duly completed Letter of Transmittal and Election Form and all documents required to evidence and effect such transfer. SECTION 4.5 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES No interest, dividends or other distributions paid, declared or made with respect to (i) Debentures, (ii) Exchangeable Shares, or (iii) AMVESCAP Ordinary Shares, in each case with a record date after the Effective Time, shall be paid to the holder of any unsurrendered certificate which immediately prior to the Effective Time represented outstanding Trimark Common Shares or outstanding Holdco Shares, and no cash payment in lieu of Debentures with a principal amount less than Cdn.$1,000 or in lieu of fractional Exchangeable Shares or AMVESCAP Ordinary Shares shall be paid to any such Person pursuant to section 4.6, unless and until such Person shall have complied with the provisions of sections 4.2, 4.3 or 4.4, as applicable. Subject to applicable law, at the time such Person shall have complied with the provisions of such sections (or, in the case of clause (z) below, at the appropriate payment date), there shall be paid to such Person, without interest, (x) the amount of any cash payable in lieu of Debentures with a principal amount less than Cdn.$1,000 or in lieu of a fractional Exchangeable Share or AMVESCAP Ordinary Share to which such Person is entitled pursuant to section 4.6, (y) the amount of interest, dividends or other distributions with a record date after the Effective Time theretofore paid with respect to the Debentures, the Exchangeable Share or the AMVESCAP Ordinary Share, as the case may be, to which such Person is entitled pursuant hereto and (z) on the appropriate payment date, the amount of interest, dividends or other distributions with a record date after the Effective Time but prior to the date of compliance by such Person with the provisions of sections 4.2, 4.3 or 4.4 and a payment date subsequent to the date of such compliance and payable with respect to such Debentures, Exchangeable Shares or AMVESCAP Ordinary Shares, as the case may be. SECTION 4.6 NO FRACTIONAL DEBENTURES OR SHARES No certificates representing Debentures with a principal amount less than Cdn.$1,000 or fractional Exchangeable Shares or fractional AMVESCAP Ordinary Shares shall be issued upon compliance with the provisions of sections 4.2, 4.3 or 4.4 and no interest payment and no dividend, stock split or other change in the capital structure of Exchangeco or AMVESCAP shall relate to any such fractional security and such fractional interests shall not entitle the owner thereof to exercise any rights as a security holder of Exchangeco or AMVESCAP. In lieu of any such fractional securities, each Person otherwise entitled to Debentures with a principal amount less than Cdn.$1,000 or to a fractional interest in an Exchangeable Share or AMVESCAP Ordinary Share will be entitled to receive from Exchangeco (i) the principal amount of such Debentures or (ii) a cash payment equal to such fractional interest multiplied by the Current Market Price of an AMVESCAP Ordinary Share as of the Effective 74 -24- Date, as the case may be. On the date of the notice referred to in section 7(2) of the Exchangeable Share Provisions, the aggregate number of Exchangeable Shares and the aggregate number of AMVESCAP Ordinary Shares for which no certificates were issued as a result of the foregoing provisions of this section 4.6 shall be deemed to have been surrendered by the Agent for no consideration to Exchangeco or AMVESCAP, as the case may be. SECTION 4.7 LOST CERTIFICATES In the event any certificate which immediately prior to the Effective Time represented one or more outstanding Trimark Common Shares that were exchanged pursuant to section 2.2 shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed, the Agent will issue in exchange for such lost, stolen or destroyed certificate, any cash and/or certificates representing Debentures, Exchangeable Shares or AMVESCAP Ordinary Shares (and any interest, dividends or distributions with respect thereto) deliverable in accordance with section 2.2 and such holder's Letter of Transmittal and Election Form. When authorizing such payment in exchange for any lost, stolen or destroyed certificate, the Person to whom cash and/or certificates representing Debentures, Exchangeable Shares or AMVESCAP Ordinary Shares are to be issued shall, as a condition precedent to the issuance thereof, give a bond satisfactory to Trimark, Exchangeco, AMVESCAP and their respective transfer agents in such sum as Trimark, Exchangeco or AMVESCAP may direct or otherwise indemnify Trimark, Exchangeco and AMVESCAP in a manner satisfactory to Trimark, Exchangeco and AMVESCAP against any claim that may be made against Trimark, Exchangeco or AMVESCAP with respect to the certificate alleged to have been lost, stolen or destroyed. SECTION 4.8 EXTINCTION OF RIGHTS Any certificate which immediately prior to the Effective Time represented outstanding Trimark Common Shares that were exchanged pursuant to section 2.2 that is not deposited with all other instruments required by sections 4.1, 4.2, 4.3 or 4.4 on or prior to the date of the notice referred to in section 7(2) of the Exchangeable Share Provisions shall cease to represent a claim or interest of any kind or nature as a securityholder of Exchangeco or AMVESCAP. On such date, the (i) cash and/or Exchangeable Shares and/or (ii) the Debentures to which the former holder of the certificate referred to in the preceding sentence was ultimately entitled shall be deemed to have been surrendered for no consideration to Exchangeco. None of AMVESCAP, Trimark, Exchangeco or the Agent shall be liable to any person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. 75 -25- SECTION 4.9 WITHHOLDING RIGHTS Trimark, Exchangeco, Callco, AMVESCAP and the Agent shall be entitled to deduct and withhold from any interest, dividend or consideration otherwise payable to any holder of Trimark Common Shares, Holdco Shares, Debentures, AMVESCAP Ordinary Shares or Exchangeable Shares such amounts as Trimark, Exchangeco, Callco, AMVESCAP or the Agent is required to deduct and withhold with respect to such payment under the Tax Act, United Kingdom tax laws or any provision of provincial, territorial, state, local or foreign tax law, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the holder of the securities in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to such holder, Trimark, Exchangeco, Callco, AMVESCAP and the Agent are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to Trimark, Exchangeco, Callco, AMVESCAP or the Agent, as the case may be, to enable it to comply with such deduction or withholding requirement (provided that, if practicable, first Debentures, then AMVESCAP Ordinary Shares and finally Exchangeable Shares will be sold or otherwise disposed of) and Trimark, Exchangeco, Callco, AMVESCAP or the Agent shall notify the holder thereof and remit any unapplied balance of the net proceeds of such sale. SECTION 4.10 STAMP TAX Notwithstanding any other provision herein, a holder of Debentures and/or Exchangeable Shares or a Person to whom Debentures and/or Exchangeable Shares are issued (in each case other than AMVESCAP, its Affiliates (except for Affiliates who, at the date of the Merger Agreement, were Affiliates and holders of Trimark Common Shares and except in respect of the conversion into or exchange of such shares for AMVESCAP Ordinary Shares, Exchangeable Shares or Debentures and any transfer of such securities), the Agent and the Transfer Agent) shall be responsible for any and all Stamp Taxes payable by any Person in connection with the transfer or issuance of such Person's securities or their conversion into or exchange for Exchangeable Shares or AMVESCAP Ordinary Shares (or any transaction or event completed in furtherance of such transfer, issuance, conversion or exchange) and a transferee of AMVESCAP Ordinary Shares or a Person to whom AMVESCAP Ordinary Shares are issued (in each case other than AMVESCAP, its Affiliates (except for Affiliates who, at the date of the Merger Agreement, were Affiliates and holders of Trimark Common Shares and except in respect of the conversion into or exchange of such shares for AMVESCAP Ordinary Shares, Exchangeable Shares or Debentures and any transfer of such securities), the Agent and the Transfer Agent) shall be responsible for any and all Stamp Taxes payable by 76 -26- any Person in connection with the transfer or issuance of such Person's shares (or any transaction or event completed in furtherance of such transfer or issuance); provided that, in no event shall any Person (other than AMVESCAP, its Affiliates, the Agent and the Transfer Agent) be entitled to rely on the provisions of this section 4.10 in any action, suit or proceeding relating to Stamp Taxes brought against any holder of Debentures and/or Exchangeable Shares or any Person to whom Debentures and/or Exchangeable Shares are issued. In no event will AMVESCAP, its Affiliates, the Agent or the Transfer Agent be responsible for any such Stamp Taxes and AMVESCAP, its Affiliates, the Agent and/or the Transferee Agent shall make such regulations and arrangements as are necessary to ensure that such holders, such transferees and such Persons pay all such applicable Stamp Taxes. ARTICLE 5 CERTAIN RIGHTS OF CALLCO TO ACQUIRE EXCHANGEABLE SHARES SECTION 5.1 CALLCO LIQUIDATION CALL RIGHT (1) Callco shall have the overriding right (the "LIQUIDATION CALL RIGHT"), in the event of and notwithstanding the proposed liquidation, dissolution or winding-up of Exchangeco or any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding up its affairs, pursuant to Article 5 of the Exchangeable Share Provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is AMVESCAP or an Affiliate of AMVESCAP) on the Liquidation Date all but not less than all of the Exchangeable Shares held by each such holder on payment by Callco of an amount per share (the "LIQUIDATION CALL PURCHASE PRICE") equal to the Current Market Price of an AMVESCAP Ordinary Share on the last Business Day prior to the Liquidation Date, which shall be satisfied in full by Callco delivering or causing to be delivered to such holder one AMVESCAP Ordinary Share, which on issue will be admitted to listing by the UKLA and traded on the LSE, plus any Dividend Amount. In the event of the exercise of the Liquidation Call Right by Callco, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to Callco on the Liquidation Date on payment by Callco to the holder of the Liquidation Call Purchase Price for each such share, and Exchangeco shall have no obligation to pay any Liquidation Amount or Dividend Amount to the holders of such shares so purchased by Callco. (2) To exercise the Liquidation Call Right, Callco must notify Exchangeco's transfer agent (the "TRANSFER AGENT"), as agent for the holders of Exchangeable Shares, and Exchangeco of Callco's intention to exercise such right at least 45 days before the Liquidation Date in the case of a voluntary liquidation, dissolution or winding-up of Exchangeco or any other voluntary 77 -27- distribution of the assets of Exchangeco among its shareholders for the purpose of winding up its affairs, and at least five Business Days before the Liquidation Date in the case of an involuntary liquidation, dissolution or winding-up of Exchangeco or any other involuntary distribution of the assets of Exchangeco among its shareholders for the purpose of winding up its affairs. The Transfer Agent will notify the holders of Exchangeable Shares as to whether or not Callco has exercised the Liquidation Call Right forthwith after the expiry of the period during which the same may be exercised by Callco. If Callco exercises the Liquidation Call Right, then on the Liquidation Date Callco will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Liquidation Call Purchase Price. (3) For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Liquidation Call Right, Callco shall deposit or cause to be deposited with the Transfer Agent, on or before the Liquidation Date, certificates representing the aggregate number of AMVESCAP Ordinary Shares which Callco shall deliver or cause to be delivered pursuant to Section 5.1(1) and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the aggregate Dividend Amount, if any, in payment of the total Liquidation Call Purchase Price, in each case less any amounts withheld pursuant to section 4.9. Provided that Callco has complied with the immediately preceding sentence, on and after the Liquidation Date the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including, without limitation, any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the total Liquidation Call Purchase Price, unless payment of the total Liquidation Call Purchase Price for the Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the following provisions of this section 5.1(3), in which case the rights of the holders shall remain unaffected until the total Liquidation Call Purchase Price has been paid in the manner herein provided. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Companies Act and the Memorandum and Articles of Association of Exchangeco and such additional documents, instruments and payments (including, without limitation, any applicable Stamp Taxes) as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of Callco shall transfer to such holder, the AMVESCAP Ordinary Shares to which such holder is entitled and as soon as reasonably 78 -28- practicable thereafter the Transfer Agent shall deliver to such holder certificates representing the AMVESCAP Ordinary Shares to which the holder is entitled and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the remaining portion, if any, of the total Liquidation Call Purchase Price, and when received by the Transfer Agent, all dividends and other distributions with respect to such AMVESCAP Ordinary Shares with a record date after the Liquidation Date and before the date of the transfer of such AMVESCAP Ordinary Shares to such holder, less any amounts withheld pursuant to section 4.9. If Callco does not exercise the Liquidation Call Right in the manner described above, on the Liquidation Date the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the Liquidation Amount otherwise payable by Exchangeco in connection with the liquidation, dissolution or winding-up of Exchangeco or any distribution of the assets of Exchangeco among its shareholders for the purpose of winding up its affairs pursuant to Article 5 of the Exchangeable Share Provisions. SECTION 5.2 CALLCO REDEMPTION CALL RIGHT In addition to Callco's rights contained in the Exchangeable Share Provisions, including, without limitation, the Retraction Call Right (as defined in the Exchangeable Share Provisions), Callco shall have the following rights in respect of the Exchangeable Shares: (a) Callco shall have the overriding right (the "REDEMPTION CALL RIGHT"), notwithstanding the proposed redemption of the Exchangeable Shares by Exchangeco pursuant to Article 7 of the Exchangeable Share Provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is AMVESCAP or an Affiliate of AMVESCAP) on the Redemption Date all but not less than all of the Exchangeable Shares held by each such holder on payment by Callco to each holder of an amount per Exchangeable Share (the "REDEMPTION CALL PURCHASE PRICE") equal to the Current Market Price of an AMVESCAP Ordinary Share on the last Business Day prior to the Redemption Date, which shall be satisfied in full by Callco delivering or causing to be delivered to such holder one AMVESCAP Ordinary Share, which on issue will be admitted to listing by the UKLA and traded on the LSE, plus any Dividend Amount. In the event of the exercise of the Redemption Call Right by Callco, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to Callco on the Redemption Date on payment by Callco to the holder of the Redemption Call Purchase Price for each such share, and Exchangeco shall have no 79 -29- obligation to redeem, or to pay any Dividend Amount in respect of, such shares so purchased by Callco. (b) To exercise the Redemption Call Right, Callco must notify the Transfer Agent, as agent for the holders of Exchangeable Shares, and Exchangeco of Callco's intention to exercise such right at least 60 days before the Redemption Date, except in the case of a redemption occurring as a result of an AMVESCAP Control Transaction or an Exchangeable Share Voting Event, in which case Callco shall so notify the Transfer Agent and Exchangeco on or before the Redemption Date. The Transfer Agent will notify the holders of the Exchangeable Shares as to whether or not Callco has exercised the Redemption Call Right forthwith after the expiry of the period during which the same may be exercised by Callco. If Callco exercises the Redemption Call Right, on the Redemption Date Callco will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Redemption Call Purchase Price. (c) For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Redemption Call Right, Callco shall deposit or cause to be deposited with the Transfer Agent, on or before the Redemption Date, certificates representing the aggregate number of AMVESCAP Ordinary Shares which Callco shall deliver or cause to be delivered pursuant to Section 5.2(1) and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the aggregate Dividend Amount, if any, in payment of the total Redemption Call Purchase Price, in each case less any amounts withheld pursuant to section 4.9. Provided that Callco has complied with the immediately preceding sentence, on and after the Redemption Date the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including, without limitation, any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the total Redemption Call Purchase Price, unless payment of the total Redemption Call Purchase Price for the Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the following provisions of this section 5.2(c), in which case the rights of the holders shall remain unaffected until the total Redemption Call Purchase Price has been paid in the manner herein provided. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a 80 -30- transfer of Exchangeable Shares under the Companies Act and the Memorandum and Articles of Association of Exchangeco and such additional documents, instruments and payments (including, without limitation, any applicable Stamp Taxes) as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of Callco shall transfer to such holder, the AMVESCAP Ordinary Shares to which such holder is entitled and as soon as reasonably practicable thereafter the Transfer Agent shall deliver to such holder certificates representing the AMVESCAP Ordinary Shares to which the holder is entitled and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the remaining portion, if any, of the total Redemption Call Purchase Price and when received by the Transfer Agent, all dividends and other distributions with respect to such AMVESCAP Ordinary Shares with a record date after the Redemption Date and before the date of the transfer of such AMVESCAP Ordinary Shares to such holder, less any amounts withheld pursuant to section 4.9. If Callco does not exercise the Redemption Call Right in the manner described above, on the Redemption Date the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the redemption price otherwise payable by Exchangeco in connection with the redemption of the Exchangeable Shares pursuant to Article 7 of the Exchangeable Share Provisions. ARTICLE 6 AMENDMENTS SECTION 6.1 AMENDMENTS TO PLAN OF ARRANGEMENT (1) Trimark reserves the right to amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Time, provided that each such amendment, modification and/or supplement must be (i) set out in writing, (ii) approved by AMVESCAP, (iii) filed with the Court and, if made following the Trimark Meeting, approved by the Court, and (iv) communicated to holders of Trimark Common Shares and Trimark Options if and as required by the Court. (2) Any amendment, modification or supplement to this Plan of Arrangement may be proposed by Trimark at any time prior to the Trimark Meeting (provided that AMVESCAP shall have consented thereto) with or without any other prior notice or communication, and if so proposed and accepted by the Persons voting at the Trimark Meeting (other than as may be required 81 -31- under the Interim Order), shall become part of this Plan of Arrangement for all purposes. (3) Any amendment, modification or supplement to this Plan of Arrangement that is approved or directed by the Court following the Trimark Meeting shall be effective only (i) if it is consented to by each of Trimark, Exchangeco and AMVESCAP and (ii) if required by the Court, it is consented to by holders of the Trimark Common Shares and Trimark Options voting in the manner directed by the Court. (4) Any amendment, modification or supplement to this Plan of Arrangement may be made following the Effective Date unilaterally by AMVESCAP, provided that it concerns a matter which, in the reasonable opinion of AMVESCAP, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse or prejudicial to the financial or economic interests of any holder of Exchangeable Shares or Debentures or any Person who, upon compliance with the terms and conditions set out herein, is entitled to become a holder of Exchangeable Shares or Debentures. ARTICLE 7 FURTHER ASSURANCES SECTION 7.1 FURTHER ASSURANCES Each of the parties to the Merger Agreement shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order further to document or evidence any of the transactions or events set out herein. 82 APPENDIX 1 TO THE PLAN OF ARRANGEMENT PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES The Exchangeable Shares shall have the following rights, privileges, restrictions and conditions: SECTION 1 INTERPRETATION (1) For the purposes of these share provisions: "AFFILIATE" has the meaning ascribed thereto in the Securities Act. "AGENT" means any chartered bank or trust company in Canada selected by the Corporation for the purposes of holding some or all of the Liquidation Amount or Redemption Price in accordance with section 5 or 7, respectively. "AMVESCAP" means AMVESCAP PLC, a corporation existing under the laws of England. "AMVESCAP ORDINARY SHARES" mean the ordinary shares in the capital of AMVESCAP and any other securities into which such shares may be changed. "AMVESCAP CONTROL TRANSACTION" means any merger, amalgamation, arrangement, take-over bid or tender offer, material sale of shares or rights or interests therein or thereto or similar transactions involving AMVESCAP, or any proposal to do so. "AMVESCAP DIVIDEND DECLARATION DATE" means the date on which (i) in the case of an interim dividend, the board of directors of AMVESCAP and (ii) in the case of a final dividend, AMVESCAP in a general meeting, declares any dividend on the AMVESCAP Ordinary Shares. "ARRANGEMENT" means an arrangement under section 182 of the OBCA on the terms and subject to the conditions set out in the Plan of Arrangement, to which plan these share provisions are attached as Appendix 1 and which Plan of Arrangement (other than Appendix 1 thereto) is attached to these share provisions as Exhibit A. "BOARD OF DIRECTORS" means the Board of Directors of the Corporation. "BUSINESS DAY" means any day on which commercial banks are open for business in Toronto, Ontario and London, England, other than a Saturday, a 83 -2- Sunday or a day observed as a holiday in Toronto, Ontario or London, England under applicable laws. "CALLCO" means AVZ Callco Inc., a company existing under the laws of Nova Scotia. "CALLCO CALL NOTICE" has the meaning ascribed thereto in section 6(3) of these share provisions. "CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a currency other than Canadian dollars (the "FOREIGN CURRENCY AMOUNT") at any date the product obtained by multiplying: (a) the Foreign Currency Amount; by (b) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the Board of Directors to be appropriate for such purpose. "COMMON SHARES" means the common shares in the capital of the Corporation. "COMPANIES ACT" means the Companies Act (Nova Scotia), as amended. "CORPORATION" means AMVESCAP Inc., a corporation incorporated under the laws of Nova Scotia. "CURRENT MARKET PRICE" means, in respect of an AMVESCAP Ordinary Share on any date, the quotient obtained by dividing (a) the aggregate of the Daily Value of Trades for each day during the period of 20 consecutive trading days ending not more than three trading days before such date; by (b) the aggregate volume of AMVESCAP Ordinary Shares used to calculate such Daily Value of Trades. "DAILY VALUE OF TRADES" means, in respect of the AMVESCAP Ordinary Shares on any trading day, the Canadian Dollar Equivalent of the product of (a) the volume weighted average price of AMVESCAP Ordinary Shares on the LSE (or, if the AMVESCAP Ordinary Shares are not listed on the LSE, on such other stock exchange or automated quotation system on which the AMVESCAP Ordinary Shares are listed or quoted, as the case may be, as may be selected by the board of directors of AMVESCAP for such purpose) on such date, as determined by Bloomberg L.P. or another reputable, third party 84 -3- information source selected by the board of directors of AMVESCAP; and (b) the aggregate volume of AMVESCAP Ordinary Shares traded on such day on the LSE or such other stock exchange or automated quotation system and used to calculate such volume weighted average price; provided that any such selections by the board of directors of AMVESCAP shall be conclusive and binding. "DIRECTOR" means the Director appointed pursuant to section 278 of the OBCA. "DIVIDEND AMOUNT" means an amount equal to, and in full satisfaction of, all declared and unpaid dividends on an Exchangeable Share held by a holder on any dividend record date which occurred prior to the date of purchase of such share by Callco from such holder. "EFFECTIVE DATE" means the date shown on the certificate of arrangement to be issued by the Director under the OBCA giving effect to the Arrangement. "EXCHANGEABLE SHARES" mean the non-voting exchangeable shares in the capital of the Corporation, having the rights, privileges, restrictions and conditions set forth herein. "EXCHANGEABLE SHARE VOTING EVENT" means any matter in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of the Corporation in order to approve or disapprove, as applicable, any change to, or in the rights of the holders of, the Exchangeable Shares, where the approval or disapproval, as applicable, of such change would be required to maintain the economic equivalence of the Exchangeable Shares and the AMVESCAP Ordinary Shares. "GOVERNMENTAL ENTITY" means any (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) any subdivision, agent, commission, board, or authority of any of the foregoing, or (c) any quasi- governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing. "HOLDER" means, when used with reference to the Exchangeable Shares, a holder of Exchangeable Shares shown from time to time in the register maintained by or on behalf of the Corporation in respect of the Exchangeable Shares. "LIQUIDATION AMOUNT" has the meaning ascribed thereto in section 5(1) of these share provisions. 85 -4- "LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in the Plan of Arrangement. "LIQUIDATION DATE" has the meaning ascribed thereto in section 5(1) of these share provisions. "LSE" means the London Stock Exchange plc or its successors. "MERGER AGREEMENT" means the amended and restated merger agreement made as of May 9, 2000 between AMVESCAP and Trimark Financial Corporation, as further amended, supplemented and/or restated in accordance with its terms, providing for, among other things, the Arrangement. "OBCA" means the Business Corporations Act (Ontario), as amended. "PERSON" includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Governmental Entity, syndicate or other entity, whether or not having legal status. "PLAN OF ARRANGEMENT" means the plan of arrangement substantially in the form and content of Schedule B annexed to the Merger Agreement and any amendments or variations thereto made in accordance with section 6.1 of the Merger Agreement or Article 6 of the Plan of Arrangement or made at the direction of the Court. "PURCHASE PRICE" has the meaning ascribed thereto in section 6(3) of these share provisions. "REDEMPTION CALL PURCHASE PRICE" has the meaning ascribed thereto in the Plan of Arrangement. "REDEMPTION CALL RIGHT" has the meaning ascribed thereto in the Plan of Arrangement. "REDEMPTION DATE" means the date, if any, established by the Board of Directors for the redemption by the Corporation of all but not less than all of the outstanding Exchangeable Shares pursuant to Section 7 of these share provisions, which date shall be no earlier than December 31, 2009, unless: (a) there are fewer than 5,000,000 Exchangeable Shares outstanding (other than Exchangeable Shares held by AMVESCAP and its affiliates, and 86 -5- as such number of shares may be adjusted as deemed appropriate by the Board of Directors to give effect to any subdivision or consolidation of or stock dividend on the Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable Shares or securities exchangeable for or convertible into Exchangeable Shares, any issue or distribution of other securities or rights or evidences of indebtedness or assets, or any other capital reorganization or other transaction affecting the Exchangeable Shares), in which case the Board of Directors may accelerate such redemption date to such date prior to December 31, 2009 as they may determine, upon at least 60 days' prior written notice to the holders of the Exchangeable Shares and the Trustee; (b) an AMVESCAP Control Transaction occurs, in which case, provided that the Board of Directors determines, in good faith and in its sole discretion, that it is not reasonably practicable to substantially replicate the terms and conditions of the Exchangeable Shares in connection with such AMVESCAP Control Transaction and that the redemption of all but not less than all of the outstanding Exchangeable Shares is necessary to enable the completion of such AMVESCAP Control Transaction in accordance with its terms, the Board of Directors may accelerate such redemption date to such date prior to December 31, 2009 as they may determine, upon such number of days' prior written notice to the holders of the Exchangeable Shares and the Trustee as the Board of Directors may determine to be reasonably practicable in such circumstances; or (c) an Exchangeable Share Voting Event is proposed and the holders of the Exchangeable Shares fail to take the necessary action, at a meeting or other vote of holders of Exchangeable Shares, to approve or disapprove, as applicable, the Exchangeable Share Voting Event, in which case the redemption date shall be the Business Day following the day on which the holders of the Exchangeable Shares failed to take such action, provided, however, that the accidental failure or omission to give any notice of redemption under clauses (a), (b) or (c) above to any of the holders of Exchangeable Shares shall not affect the validity of any such redemption. "REDEMPTION PRICE" has the meaning ascribed thereto in section 7(1) of these share provisions. "RETRACTED SHARES" has the meaning ascribed thereto in section 6(1)(a) of these share provisions. 87 -6- "RETRACTION CALL RIGHT" has the meaning ascribed thereto in section 6(1)(c) of these share provisions. "RETRACTION DATE" has the meaning ascribed thereto in section 6(1)(b) of these share provisions. "RETRACTION PRICE" has the meaning ascribed thereto in section 6(1) of these share provisions. "RETRACTION REQUEST" has the meaning ascribed thereto in section 6(1) of these share provisions. "SECURITIES ACT" means the Securities Act (Ontario) and the rules, regulations and policies made thereunder, as amended. "STAMP TAXES" means all stamp, registration and transfer taxes and duties or their equivalents in all jurisdictions where such taxes and duties are payable as a result of any of the transactions contemplated by these share provisions including, without limitation, United Kingdom stamp duty and stamp duty reserve tax. "SUPPORT AGREEMENT" means the agreement made between AMVESCAP, Callco and the Corporation substantially in the form and content of Schedule D annexed to the Merger Agreement, as amended pursuant to the terms of the Support Agreement. "TRANSFER AGENT" means CIBC Mellon Trust Company or such other Person as may from time to time be appointed by the Corporation as the registrar and transfer agent for the Exchangeable Shares. "TRUSTEE" means the trustee chosen by AMVESCAP to act as trustee under the Voting and Exchange Trust Agreement, being a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all the provinces of Canada, and any successor trustee appointed under the Voting and Exchange Trust Agreement. "UKLA" means the Financial Services Authority in its capacity as the competent authority for the purposes of Part IV of the Financial Services Act 1986 of the United Kingdom (or any successor Act). "VOTING AND EXCHANGE TRUST AGREEMENT" means the agreement made between AMVESCAP, the Corporation and the Trustee in connection with the Plan of Arrangement in the form of Schedule E annexed to the Merger Agreement, as amended pursuant to the terms of the Voting and Exchange Trust Agreement. 88 -7- SECTION 2 RANKING OF EXCHANGEABLE SHARES The Exchangeable Shares shall be entitled to a preference over the Common Shares and any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs. SECTION 3 DIVIDENDS (1) A holder of an Exchangeable Share shall be entitled to receive and the Board of Directors shall, subject to applicable law, on each AMVESCAP Dividend Declaration Date, declare a dividend on each Exchangeable Share: (a) in the case of a cash dividend declared on the AMVESCAP Ordinary Shares, in an amount in cash for each Exchangeable Share equal to the Canadian Dollar Equivalent of the cash dividend declared on each AMVESCAP Ordinary Share on the AMVESCAP Dividend Declaration Date; (b) in the case of a stock dividend declared on the AMVESCAP Ordinary Shares to be paid in AMVESCAP Ordinary Shares, by the issue or transfer by the Corporation of such number of Exchangeable Shares for each Exchangeable Share as is equal to the number of AMVESCAP Ordinary Shares to be paid on each AMVESCAP Ordinary Share unless in lieu of such stock dividend the Corporation elects to effect a corresponding and contemporaneous and economically equivalent (as determined by the Board of Directors in accordance with section 2.7(d) of the Support Agreement) subdivision of the outstanding Exchangeable Shares; or (c) in the case of a dividend declared on the AMVESCAP Ordinary Shares in property other than cash or AMVESCAP Ordinary Shares, in such type and amount of property for each Exchangeable Share as is the same as or economically equivalent to (to be determined by the Board of Directors as contemplated by section 3(5) hereof) the type and amount of property declared as a dividend on each AMVESCAP Ordinary Share. Such dividends shall be paid out of money, assets or property of the Corporation properly applicable to the payment of dividends, or out of authorized but unissued shares of the Corporation, as applicable. The holders of Exchangeable Shares shall not be entitled to any dividends other than or in excess of the dividends referred to in this section 3.1. 89 -8- (2) Cheques of the Corporation payable at par at any branch of the bankers of the Corporation shall be issued in respect of any cash dividends contemplated by section 3(1)(a) hereof and the sending of such a cheque to each holder of an Exchangeable Share shall satisfy the cash dividend represented thereby unless the cheque is not paid on presentation. Certificates registered in the name of the registered holder of Exchangeable Shares shall be issued or transferred in respect of any stock dividends contemplated by section 3(1)(b) hereof and the sending of such a certificate to each holder of an Exchangeable Share shall satisfy the stock dividend represented thereby. Such other type and amount of property in respect of any dividends contemplated by section 3(1)(c) hereof shall be issued, distributed or transferred by the Corporation in such manner as it shall determine and the issuance, distribution or transfer thereof by the Corporation to each holder of an Exchangeable Share shall satisfy the dividend represented thereby. No holder of an Exchangeable Share shall be entitled to recover by action or other legal process against the Corporation any dividend that is represented by a cheque that has not been duly presented to the Corporation's bankers for payment or that otherwise remains unclaimed for a period of six years from the date on which such dividend was payable. (3) The record date for the determination of the holders of Exchangeable Shares entitled to receive payment of, and the payment date for, any dividend declared on the Exchangeable Shares under section 3(1) hereof shall be the same dates as the record date and payment date, respectively, for the corresponding dividend declared on the AMVESCAP Ordinary Shares. The record date for the determination of the holders of Exchangeable Shares entitled to receive Exchangeable Shares in connection with any subdivision, redivision or change of the Exchangeable Shares under section 3(1)(b) hereof and the effective date of such subdivision shall be the same dates as the record and payment date, respectively, for the corresponding stock dividend declared on the AMVESCAP Ordinary Shares. (4) If on any payment date for any dividends declared on the Exchangeable Shares under section 3(1) hereof the dividends are not paid in full on all of the Exchangeable Shares then outstanding, any such dividends that remain unpaid shall be paid on a subsequent date or dates determined by the Board of Directors on which the Corporation shall have sufficient moneys, assets or property properly applicable to the payment of such dividends. (5) The Board of Directors shall determine, in good faith and in its sole discretion, economic equivalence for the purposes of section 3(1) hereof, and each such determination shall be conclusive and binding on the Corporation and its shareholders. In making each such determination, the following 90 -9- factors shall, without excluding other factors determined by the Board of Directors to be relevant, be considered by the Board of Directors: (a) in the case of any stock dividend or other distribution payable in AMVESCAP Ordinary Shares, the number of such shares issued in proportion to the number of AMVESCAP Ordinary Shares previously outstanding; (b) in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase AMVESCAP Ordinary Shares (or securities exchangeable for or convertible into or carrying rights to acquire AMVESCAP Ordinary Shares), the relationship between the exercise price of each such right, option or warrant and the Current Market Price; (c) in the case of the issuance or distribution of any other form of property (including without limitation any shares or securities of AMVESCAP of any class other than AMVESCAP Ordinary Shares, any rights, options or warrants other than those referred to in section 3(5)(b) hereof, any evidences of indebtedness of AMVESCAP or any assets of AMVESCAP), the relationship between the fair market value (as determined by the Board of Directors in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding AMVESCAP Ordinary Share and the Current Market Price of an AMVESCAP Ordinary Share; and (d) in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of AMVESCAP Ordinary Shares as a result of differences between taxation laws of Canada and the United Kingdom (except for any differing consequences arising as a result of differing marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares). SECTION 4 CERTAIN RESTRICTIONS So long as any of the Exchangeable Shares are outstanding, the Corporation shall not at any time without, but may at any time with, the approval of the holders of the Exchangeable Shares given as specified in section 10(2) of these share provisions: (a) pay any dividends on the Common Shares or any other shares ranking junior to the Exchangeable Shares, other than stock dividends payable 91 -10- in Common Shares or any such other shares ranking junior to the Exchangeable Shares, as the case may be; (b) redeem or purchase or make any capital distribution in respect of Common Shares or any other shares ranking junior to the Exchangeable Shares; (c) redeem or purchase any other shares of the Corporation ranking equally with the Exchangeable Shares with respect to the payment of dividends or the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs; or (d) issue any Exchangeable Shares or any other shares of the Corporation ranking equally with, or superior to, the Exchangeable Shares other than (i) in accordance with the terms of an Indenture to be dated the Effective Date among AMVESCAP, the Corporation and CIBC Mellon Trust Company pursuant to which the Corporation may issue 6% equity subordinated debentures to certain holders of securities of Trimark pursuant to the Plan of Arrangement, and (ii) by way of stock dividends to the holders of such Exchangeable Shares. The restrictions in sections 4(1)(a), (b), (c) and (d) hereof shall not apply if all dividends on the outstanding Exchangeable Shares corresponding to dividends declared and paid to date on the AMVESCAP Ordinary Shares shall have been declared and paid on the Exchangeable Shares. SECTION 5 DISTRIBUTION ON LIQUIDATION (1) In the event of the liquidation, dissolution or winding-up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, subject to the exercise by Callco of the Liquidation Call Right, a holder of Exchangeable Shares shall be entitled, subject to applicable law, to receive from the assets of the Corporation in respect of each Exchangeable Share held by such holder on the effective date (the "LIQUIDATION DATE") of such liquidation, dissolution, winding-up or other distribution, before any distribution of any part of the assets of the Corporation among the holders of the Common Shares or any other shares ranking junior to the Exchangeable Shares, an amount per share (the "LIQUIDATION Amount") equal to the Current Market Price of an AMVESCAP Ordinary Share on the last Business Day prior to the Liquidation Date, which shall be satisfied in full by the Corporation delivering or causing to be delivered to such holder one AMVESCAP Ordinary Share, plus an amount equal to all declared and unpaid dividends on each such 92 -11- Exchangeable Share held by such holder on any dividend record date which occurred prior to the Liquidation Date. (2) On or promptly after the Liquidation Date, and provided the Liquidation Call Right has not been exercised by Callco, the Corporation shall pay or cause to be paid to the holders of the Exchangeable Shares the Liquidation Amount for each such Exchangeable Share upon presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Companies Act and the Memorandum and Articles of Association of the Corporation and such additional documents, instruments and payments (including, without limitation, any applicable Stamp Taxes) as the Transfer Agent and the Corporation may reasonably require, at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation by notice to the holders of the Exchangeable Shares. Payment of the total Liquidation Amount for such Exchangeable Shares shall be made by transferring or causing to be transferred to each holder the AMVESCAP Ordinary Shares to which such holder is entitled and by delivering to such holder, at the address of such holder recorded in the register of shareholders of the Corporation for the Exchangeable Shares or by holding for pick-up by such holder at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation by notice to the holders of Exchangeable Shares, on behalf of the Corporation certificates representing AMVESCAP Ordinary Shares (which shares shall be fully paid and shall be free and clear of any lien, claim or encumbrance) and a cheque of the Corporation payable at par at any branch of the bankers of the Corporation in respect of the remaining portion, if any, of the total Liquidation Amount, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom. On and after the Liquidation Date, the holders of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including, without limitation, any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the total Liquidation Amount, unless payment of the total Liquidation Amount for such Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the total Liquidation Amount has been paid in the manner hereinbefore provided. The Corporation shall have the right at any time after the Liquidation Date to transfer or cause to be issued or transferred to, and deposited with, the Agent the total Liquidation Amount in respect of the Exchangeable Shares represented by certificates that have not at the 93 -12- Liquidation Date been surrendered by the holders thereof, such Liquidation Amount to be held by the Agent as trustee for and on behalf of, and for the use and benefit of, such holders. Upon such deposit being made, the rights of a holder of Exchangeable Shares after such deposit shall be limited to receiving its proportionate part of the total Liquidation Amount for such Exchangeable Shares so deposited, without interest, and when received by the Agent, all dividends and other distributions with respect to the AMVESCAP Ordinary Shares to which such holder is entitled with a record date after the date of such deposit and before the date of transfer of such AMVESCAP Ordinary Shares to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom) against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the foregoing provisions. (3) After the Corporation has satisfied its obligations to pay the holders of the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant to section 5(1) of these share provisions, such holders shall not be entitled to share in any further distribution of the assets of the Corporation. SECTION 6 RETRACTION OF EXCHANGEABLE SHARES BY HOLDER (1) A holder of Exchangeable Shares shall be entitled at any time, subject to the exercise by Callco of the Retraction Call Right and otherwise upon compliance with, and subject to, the provisions of this section 6, to require the Corporation to redeem any or all of the Exchangeable Shares registered in the name of such holder for an amount per share equal to the Current Market Price of an AMVESCAP Ordinary Share on the last Business Day prior to the Retraction Date (the "RETRACTION PRICE"), which shall be satisfied in full by the Corporation delivering or causing to be delivered to such holder one AMVESCAP Ordinary Share (which on issue will be admitted to listing by the UKLA and admitted to trading by the LSE) for each Exchangeable Share presented and surrendered by the holder together with, on the designated payment date therefor, the full amount of all declared and unpaid dividends on any such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Retraction Date. To effect such redemption, the holder shall present and surrender at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation by notice to the holders of Exchangeable Shares the certificate or certificates representing the Exchangeable Shares which the holder desires to have the Corporation redeem, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Companies Act and the Memorandum and Articles of Association of the Corporation and such additional documents, instruments and payments (including, without limitation, any applicable Stamp Taxes) as the 94 -13- Transfer Agent and the Corporation may reasonably require, and together with a duly executed statement (the "RETRACTION REQUEST") in the form of Schedule A hereto or in such other form as may be acceptable to the Corporation: (a) specifying that the holder desires to have all or any number specified therein of the Exchangeable Shares represented by such certificate or certificates (the "RETRACTED SHARES") redeemed by the Corporation; (b) stating the Business Day on which the holder desires to have the Corporation redeem the Retracted Shares (the "RETRACTION DATE"), provided that the Retraction Date shall be not less than 10 Business Days nor more than 15 Business Days after the date on which the Retraction Request is received by the Corporation and further provided that, in the event that no such Business Day is specified by the holder in the Retraction Request, the Retraction Date shall be deemed to be the 15th Business Day after the date on which the Retraction Request is received by the Corporation and subject also to section 6(8); and (c) acknowledging the overriding right (the "RETRACTION CALL RIGHT") of Callco to purchase all but not less than all the Retracted Shares directly from the holder and that the Retraction Request shall be deemed to be a revocable offer by the holder to sell the Retracted Shares to Callco in accordance with the Retraction Call Right on the terms and conditions set out in section 6(3) hereof. (2) Provided that Callco has not exercised the Retraction Call Right, upon receipt by the Corporation or the Transfer Agent in the manner specified in section 6(1) of a certificate or certificates representing the number of Retracted Shares, together with a Retraction Request, and provided that the Retraction Request is not revoked by the holder in the manner specified in section 6(7), the Corporation shall redeem the Retracted Shares effective at the close of business on the Retraction Date and shall transfer or cause to be issued or transferred to such holder the AMVESCAP Ordinary Shares to which such holder is entitled and shall comply with section 6(4) hereof. If only a part of the Exchangeable Shares represented by any certificate is redeemed (or purchased by Callco pursuant to the Retraction Call Right), a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of the Corporation. (3) Subject to the provisions of this section 6, upon receipt by the Corporation of a Retraction Request, the Corporation shall immediately notify Callco thereof and shall provide to Callco a copy of the Retraction Request. In order to 95 -14- exercise the Retraction Call Right, Callco must notify the Corporation of its determination to do so (the "CALLCO CALL NOTICE") within five Business Days of notification to Callco by the Corporation of the receipt by the Corporation of the Retraction Request. If Callco does not so notify the Corporation within such five Business Day period, the Corporation will notify the holder as soon as possible thereafter that Callco will not exercise the Retraction Call Right. If Callco delivers the Callco Call Notice within such five Business Day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in section 6(7), the Retraction Request shall thereupon be considered only to be an offer by the holder to sell the Retracted Shares to Callco in accordance with the Retraction Call Right. In such event, the Corporation shall not redeem the Retracted Shares and Callco shall purchase from such holder and such holder shall sell to Callco on the Retraction Date the Retracted Shares for a purchase price (the "PURCHASE PRICE") per share equal to the Retraction Price per share, plus on the designated payment date therefor, to the extent not paid by the Corporation on the designated payment date therefor, any Dividend Amount. To the extent that Callco pays the Dividend Amount in respect of the Retracted Shares, the Corporation shall no longer be obligated to pay any declared and unpaid dividends on such Retracted Shares. For the purpose of completing a purchase pursuant to the Retraction Call Right, on the Retraction Date Callco shall transfer or cause to be issued or transferred to the holder of the Retracted Shares the AMVESCAP Ordinary Shares to which such holder is entitled. Provided that Callco has complied with the immediately preceding sentence and section 6(4) hereof, the closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by the Corporation of such Retracted Shares shall take place on the Retraction Date. In the event that Callco does not deliver a Callco Call Notice within such five Business Day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in section 6(7), the Corporation shall redeem the Retracted Shares on the Retraction Date and in the manner otherwise contemplated in this Section 6. (4) The Corporation or Callco, as the case may be, shall deliver or cause the Transfer Agent to deliver to the relevant holder, at the address of the holder recorded in the register of shareholders of the Corporation for the Exchangeable Shares or at the address specified in the holder's Retraction Request or by holding for pick-up by the holder at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation by notice to the holders of Exchangeable Shares, certificates representing the AMVESCAP Ordinary Shares (which shares shall be fully paid and shall be free and clear of any lien, claim or encumbrance and which 96 -15- on issue will be admitted to listing by the UKLA and admitted to trading by the LSE) registered in the name of the holder or in such other name as the holder may request, and, if applicable and on or before the payment date therefor, a cheque payable at par at any branch of the bankers of the Corporation or Callco, as applicable, representing the aggregate Dividend Amount, in payment of the total Retraction Price or the total Purchase Price, as the case may be, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom, and such delivery of such certificates and cheques on behalf of the Corporation or by Callco, as the case may be, or by the Transfer Agent shall be deemed to be payment of and shall satisfy and discharge all liability for the total Retraction Price or total Purchase Price, as the case may be, to the extent that the same is represented by such share certificates and cheques (plus any tax deducted and withheld therefrom and remitted to the proper tax authority). (5) On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof (including, without limitation, any rights under the Voting and Exchange Trust Agreement), other than the right to receive his proportionate part of the total Retraction Price or total Purchase Price, as the case may be, unless upon presentation and surrender of certificates in accordance with the foregoing provisions, payment of the total Retraction Price or the total Purchase Price, as the case may be, shall not be made as provided in section 6(4) hereof, in which case the rights of such holder shall remain unaffected until the total Retraction Price or the total Purchase Price, as the case may be, has been paid in the manner hereinbefore provided. On and after the close of business on the Retraction Date, provided that presentation and surrender of certificates and payment of the total Retraction Price or the total Purchase Price, as the case may be, has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so redeemed by the Corporation or purchased by Callco shall thereafter be a holder of the AMVESCAP Ordinary Shares delivered to it. (6) Notwithstanding any other provision of this Section 6, the Corporation shall not be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent that such redemption of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law. If the Corporation believes that on any Retraction Date it would not be permitted by any of such provisions to redeem the Retracted Shares tendered for redemption on such date, and provided that Callco shall not have exercised the Retraction Call Right with respect to the Retracted Shares, the Corporation shall only be obligated to redeem Retracted Shares specified by a 97 -16- holder in a Retraction Request to the extent of the maximum number that may be so redeemed (rounded down to a whole number of shares) as would not be contrary to such provisions and shall notify the holder and the Trustee at least two Business Days prior to the Retraction Date as to the number of Retracted Shares which will not be redeemed by the Corporation. In any case in which the redemption by the Corporation of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law, the Corporation shall redeem Retracted Shares in accordance with section 6(2) of these share provisions on a pro rata basis and shall issue to each holder of Retracted Shares a new certificate, at the expense of the Corporation, representing the Retracted Shares not redeemed by the Corporation pursuant to section 6(2) hereof. If the Corporation would otherwise be obligated to redeem the Retracted Shares pursuant to section 6(2) of these share provisions but is not obligated to do so as a result of solvency requirements or other provisions of applicable law, AMVESCAP shall, subject to applicable law, purchase such Retracted Shares from such holder on the Retraction Date or as soon as practicable thereafter on payment by AMVESCAP to such holder of the Purchase Price for each such Retracted Share, all as more specifically provided in the Voting and Exchange Trust Agreement. (7) A holder of Retracted Shares may, by notice in writing given by the holder to the Corporation before the close of business on the Business Day immediately preceding the Retraction Date, withdraw its Retraction Request, in which event such Retraction Request shall be null and void and, for greater certainty, the revocable offer constituted by the Retraction Request to sell the Retracted Shares to Callco shall be deemed to have been revoked. (8) Notwithstanding any other provisions of this section 6, if: (a) exercise of the rights of the holders of the Exchangeable Shares, or any of them, to require the Corporation to redeem any Exchangeable Shares pursuant to this section 6 on any Retraction Date would require listing particulars or any similar document to be issued in order to obtain the approval of the UKLA to the listing of, or the approval of the LSE to the trading of, the AMVESCAP Ordinary Shares that would be required to be delivered to such holders of Exchangeable Shares in connection with the exercise of such rights; and (b) as a result of (a) above, it would not be practicable (notwithstanding the reasonable endeavours of AMVESCAP) to obtain such approvals in time to enable all or any of such AMVESCAP Ordinary Shares to be admitted to listing by the UKLA or admitted to trading by the LSE when so delivered, 98 -17- that Retraction Date shall, notwithstanding any other date specified or otherwise deemed to be specified in any relevant Retraction Request, be deemed for all purposes to be the earlier of (i) the second Business Day immediately following the date the approvals referred to in section 6(8)(a) are obtained, and (ii) the date which is 30 Business Days after the date on which the relevant Retraction Request is received by the Corporation, and references in these share provisions to such Retraction Date shall be construed accordingly. (9) Notwithstanding any other provisions of this section 6, a holder may not exercise its rights pursuant to this section 6 to require the Corporation to redeem any or all of the Exchangeable Shares registered in the name of such holder to the extent that the issue of AMVESCAP Ordinary Shares resulting on the exercise of such right would require registration under the United States Securities Act of 1933, as amended. SECTION 7 REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION (1) Subject to applicable law, and provided Callco has not exercised the Redemption Call Right, the Corporation shall on the Redemption Date redeem all but not less than all of the then outstanding Exchangeable Shares for an amount per share equal to the Current Market Price of an AMVESCAP Ordinary Share on the last Business Day prior to the Redemption Date (the "REDEMPTION PRICE"), which shall be satisfied in full by the Corporation causing to be delivered to each holder of Exchangeable Shares one AMVESCAP Ordinary Share for each Exchangeable Share held by such holder, together with the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Redemption Date. (2) In any case of a redemption of Exchangeable Shares under this Section 7, the Corporation shall, at least 60 days before the Redemption Date (other than a Redemption Date established in connection with an AMVESCAP Control Transaction or an Exchangeable Share Voting Event), send or cause to be sent to each holder of Exchangeable Shares a notice in writing of the redemption by the Corporation or the purchase by Callco under the Redemption Call Right, as the case may be, of the Exchangeable Shares held by such holder. In the case of a Redemption Date established in connection with an AMVESCAP Control Transaction or an Exchangeable Share Voting Event, the written notice of the redemption by the Corporation or the purchase by Callco under the Redemption Call Right will be sent on or before the Redemption Date, on as many days prior written notice as may be determined by the Board of Directors to be reasonably practicable in the circumstances. In any such case, such notice shall set out the formula for determining the Redemption Price or 99 -18- the Redemption Call Purchase Price, as the case may be, the Redemption Date and, if applicable, particulars of the Redemption Call Right. (3) On or after the Redemption Date and provided that the Redemption Call Right has not been exercised by Callco, the Corporation shall pay or cause to be paid to the holders of the Exchangeable Shares to be redeemed the Redemption Price for each such Exchangeable Share, together with the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Redemption Date, upon presentation and surrender at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation in such notice of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Companies Act and the Memorandum and Articles of Association of the Corporation and such additional documents, instruments and payments (including, without limitation, any applicable Stamp Taxes) as the Transfer Agent and the Corporation may reasonably require. Payment of the total Redemption Price for such Exchangeable Shares shall be made by transferring or causing to be issued or transferred to each holder the AMVESCAP Ordinary Shares to which such holder is entitled and by delivering to such holder, at the address of such holder recorded in the register of shareholders of the Corporation for the Exchangeable Shares or by holding for pick-up by such holder at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation in such notice, on behalf of the Corporation certificates representing AMVESCAP Ordinary Shares (which shares shall be fully paid and shall be free and clear of any lien, claim or encumbrance), and, if applicable, a cheque of the Corporation payable at par at any branch of the bankers of the Corporation in payment of any such dividends, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom. On and after the Redemption Date, the holders of the Exchangeable Shares called for redemption shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including, without limitation, any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the total Redemption Price, unless payment of the total Redemption Price for such Exchangeable Shares shall not be made upon presentation and surrender of certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the total Redemption Price has been paid in the manner hereinbefore provided. The Corporation shall have the right at any time after the sending of notice of its intention to redeem the Exchangeable Shares as aforesaid to 100 -19- transfer or cause to be issued or transferred to, and deposited with, the Agent named in such notice the total Redemption Price for the Exchangeable Shares (except as otherwise provided in this section 7(3)) so called for redemption, or of such of the said Exchangeable Shares represented by certificates that have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, less any amounts withheld on account of tax required to be deducted and withheld therefrom, such Redemption Price to be held by the Agent as trustee for and on behalf of, and for the use and benefit of, such holders. Upon the later of such deposit being made and the Redemption Date, the Exchangeable Shares in respect whereof such deposit shall have been made shall be redeemed and the rights of the holders thereof after such deposit or Redemption Date, as the case may be, shall be limited to receiving their proportionate part of the total Redemption Price for such Exchangeable Shares, without interest, and when received by the Agent, all dividends and other distributions with respect to the AMVESCAP Ordinary Shares to which such holder is entitled with a record date after the later of the date of such deposit and the Redemption Date and before the date of transfer of such AMVESCAP Ordinary Shares to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom), against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the foregoing provisions. SECTION 8 PURCHASE FOR CANCELLATION Subject to applicable law, the Corporation may at any time and from time to time purchase for cancellation all or any part of the Exchangeable Shares. SECTION 9 VOTING RIGHTS Except as required by applicable law and by Section 10 hereof, the holders of the Exchangeable Shares shall not be entitled as such to receive notice of or to attend any meeting of the shareholders of the Corporation or to vote at any such meeting. Without limiting the generality of the foregoing, the holders of the Exchangeable Shares shall not have class votes in the circumstances described in clauses 2(2)(a) or (e) of the Third Schedule of the Companies Act as in force on the Effective Date. SECTION 10 AMENDMENT AND APPROVAL (1) The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares may be added to, changed or removed but only with the approval of the holders of the Exchangeable Shares given as hereinafter specified. (2) Any approval given by the holders of the Exchangeable Shares to add to, change or remove any right, privilege, restriction or condition attaching to the 101 -20- Exchangeable Shares or any other matter requiring the approval or consent of the holders of the Exchangeable Shares shall be deemed to have been sufficiently given if it shall have been given in accordance with applicable law subject to a minimum requirement that such approval be evidenced by resolution passed by not less than two-thirds of the votes cast on such resolution at a meeting of holders of Exchangeable Shares duly called and held at which the holders of at least 10% of the outstanding Exchangeable Shares at that time are present or represented by proxy; provided that if at any such meeting the holders of at least 10% of the outstanding Exchangeable Shares at that time are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than five days thereafter and to such time and place as may be designated by the Chairman of such meeting. At such adjourned meeting the holders of Exchangeable Shares present or represented by proxy thereat may transact the business for which the meeting was originally called and a resolution passed thereat by the affirmative vote of not less than two-thirds of the votes cast on such resolution at such meeting shall constitute the approval or consent of the holders of the Exchangeable Shares. SECTION 11 RECIPROCAL CHANGES, ETC. IN RESPECT OF AMVESCAP ORDINARY SHARES (1) Each holder of an Exchangeable Share acknowledges that the Support Agreement provides, in part, that so long as any Exchangeable Shares not owned by AMVESCAP or its affiliates are outstanding, AMVESCAP will not without the prior approval of the Corporation and the prior approval of the holders of the Exchangeable Shares given in accordance with section 10(2) of these share provisions: (a) issue or distribute AMVESCAP Ordinary Shares (or securities exchangeable for or convertible into or carrying rights to acquire AMVESCAP Ordinary Shares) to the holders of all or substantially all of the then outstanding AMVESCAP Ordinary Shares by way of stock dividend or other distribution, other than an issue of AMVESCAP Ordinary Shares (or securities exchangeable for or convertible into or carrying rights to acquire AMVESCAP Ordinary Shares) to holders of AMVESCAP Ordinary Shares (i) who exercise an option to receive dividends in AMVESCAP Ordinary Shares (or securities exchangeable for or convertible into or carrying rights to acquire AMVESCAP Ordinary Shares) in lieu of receiving cash dividends, or (ii) pursuant to any dividend reinvestment plan or scrip dividend; (b) issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding AMVESCAP Ordinary Shares entitling them to subscribe for or to purchase AMVESCAP Ordinary 102 -21- Shares (or securities exchangeable for or convertible into or carrying rights to acquire AMVESCAP Ordinary Shares); or (c) issue or distribute to the holders of all or substantially all of the then outstanding AMVESCAP Ordinary Shares: (i) shares or securities of AMVESCAP of any class other than AMVESCAP Ordinary Shares (other than shares convertible into or exchangeable for or carrying rights to acquire AMVESCAP Ordinary Shares); (ii) rights, options or warrants other than those referred to in section 11(1)(b) above; (iii) evidences of indebtedness of AMVESCAP; or (iv) assets of AMVESCAP, unless the economic equivalent on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets is issued or distributed simultaneously to holders of the Exchangeable Shares; provided that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed by AMVESCAP in order to give effect to and consummate the transactions contemplated by, and in accordance with, the Merger Agreement. (2) Each holder of an Exchangeable Share acknowledges that the Support Agreement further provides, in part, that so long as any Exchangeable Shares not owned by AMVESCAP or its affiliates are outstanding, AMVESCAP will not without the prior approval of the Corporation and the prior approval of the holders of the Exchangeable Shares given in accordance with section 10(2) of these share provisions: (a) subdivide, redivide or change the then outstanding AMVESCAP Ordinary Shares into a greater number of AMVESCAP Ordinary Shares; (b) reduce, combine, consolidate or change the then outstanding AMVESCAP Ordinary Shares into a lesser number of AMVESCAP Ordinary Shares; or (c) reclassify or otherwise change the AMVESCAP Ordinary Shares or effect an amalgamation, merger, reorganization or other transaction affecting the AMVESCAP Ordinary Shares, 103 -22- unless the same or an economically equivalent change shall simultaneously be made to, or in, the rights of the holders of the Exchangeable Shares. The Support Agreement further provides, in part, that the aforesaid provisions of the Support Agreement shall not be changed without the approval of the holders of the Exchangeable Shares given in accordance with section 10(2) of these share provisions. SECTION 12 ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT (1) The Corporation will take all such actions and do all such things as shall be necessary or advisable to perform and comply with and to ensure performance and compliance by AMVESCAP, Callco and the Corporation with all provisions of the Support Agreement applicable to AMVESCAP, Callco and the Corporation, respectively, in accordance with the terms thereof including, without limitation, taking all such actions and doing all such things as shall be necessary or advisable to enforce to the fullest extent possible for the direct benefit of the Corporation all rights and benefits in favour of the Corporation under or pursuant to such agreement. (2) The Corporation shall not propose, agree to or otherwise give effect to any amendment to, or waiver or forgiveness of its rights or obligations under, the Support Agreement without the approval of the holders of the Exchangeable Shares given in accordance with section 10(2) of these share provisions other than such amendments, waivers and/or forgiveness as may be necessary or advisable for the purposes of: (a) adding to the covenants of the other parties to such agreement for the protection of the Corporation or the holders of the Exchangeable Shares thereunder; (b) making such provisions or modifications not inconsistent with such agreement as may be necessary or desirable with respect to matters or questions arising thereunder which, in the good faith opinion of the Board of Directors, it may be expedient to make, provided that the Board of Directors shall be of the good faith opinion, after consultation with counsel, that such provisions and modifications will not be prejudicial to the interests of the holders of the Exchangeable Shares; or (c) making such changes in or corrections to such agreement which, on the advice of counsel to the Corporation, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error contained therein, provided that the Board of Directors shall be of the good faith opinion, after consultation with counsel, that such changes or 104 -23- corrections will not be prejudicial to the interests of the holders of the Exchangeable Shares. SECTION 13 LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS (1) The certificates evidencing the Exchangeable Shares shall contain or have affixed thereto a legend in form and on terms approved by the Board of Directors, with respect to the Support Agreement, the provisions of the Plan of Arrangement relating to the Liquidation Call Right and the Redemption Call Right, the Voting and Exchange Trust Agreement (including the provisions with respect to the voting rights and automatic exchange thereunder) and the Retraction Call Right. (2) Each holder of an Exchangeable Share, whether of record or beneficial, by virtue of becoming and being such a holder shall be deemed to acknowledge each of the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right, in each case, in favour of Callco, and the overriding nature thereof in connection with the liquidation, dissolution or winding-up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, or the retraction or redemption of Exchangeable Shares, as the case may be, and to be bound thereby in favour of Callco as therein provided. (3) The Corporation, Callco, AMVESCAP and the Transfer Agent shall be entitled to deduct and withhold from any dividend or consideration otherwise payable to any holder of Exchangeable Shares such amounts as the Corporation, Callco, AMVESCAP or the Transfer Agent is required to deduct and withhold with respect to such payment under the Income Tax Act (Canada) or United Kingdom tax laws or any provision of provincial, territorial, state, local or foreign tax law, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the holder of the Exchangeable Shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, the Corporation, Callco, AMVESCAP and the Transfer Agent are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to the Corporation, Callco, AMVESCAP or the Transfer Agent, as the case may be, to enable it to comply with such deduction or withholding requirement and the Corporation, Callco, AMVESCAP or the Transfer Agent shall notify the holder thereof and remit any unapplied balance of the net proceeds of such sale. 105 -24- SECTION 14 NOTICES (1) Any notice, request or other communication to be given to the Corporation by a holder of Exchangeable Shares shall be in writing and shall be valid and effective if given by mail (postage prepaid) or by telecopy or by delivery to the registered office of the Corporation and addressed to the attention of the Secretary of the Corporation. Any such notice, request or other communication, if given by mail, telecopy or delivery, shall only be deemed to have been given and received upon actual receipt thereof by the Corporation. (2) Any presentation and surrender by a holder of Exchangeable Shares to the Corporation or the Transfer Agent of certificates representing Exchangeable Shares in connection with the liquidation, dissolution or winding-up of the Corporation or the retraction or redemption of Exchangeable Shares shall be made by registered mail (postage prepaid) or by delivery to the registered office of the Corporation or to such office of the Transfer Agent as may be specified by the Corporation, in each case, addressed to the attention of the Secretary of the Corporation. Any such presentation and surrender of certificates shall only be deemed to have been made and to be effective upon actual receipt thereof by the Corporation or the Transfer Agent, as the case may be. Any such presentation and surrender of certificates made by registered mail shall be at the sole risk of the holder mailing the same. (3) Any notice, request or other communication to be given to a holder of Exchangeable Shares by or on behalf of the Corporation shall be in writing and shall be valid and effective if given by mail (postage prepaid) or by delivery to the address of the holder recorded in the register of shareholders of the Corporation or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder. Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the third Business Day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery. Accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares shall not invalidate or otherwise alter or affect any action or proceeding to be taken by the Corporation pursuant thereto. SECTION 15 DISCLOSURE OF INTERESTS IN EXCHANGEABLE SHARES The Corporation shall be entitled to require any holder of an Exchangeable Share or any Person who the Corporation knows or has reasonable cause to believe holds any interest whatsoever in an Exchangeable Share to confirm that fact or to give such details as to whom has an interest in such Exchangeable Share as would be required (if the Exchangeable Shares were a class of "equity shares" of Exchangeco) 106 -25- under section 101 of the Securities Act or as would be required under the articles of AMVESCAP or any laws or regulations, or pursuant to the rules or regulations of any regulatory authority, of the United Kingdom if the Exchangeable Shares were AMVESCAP Ordinary Shares SECTION 16 STAMP TAX Notwithstanding any other provision herein, a holder of Exchangeable Shares or a Person to whom Exchangeable Shares are issued (in each case other than the Corporation, its affiliates (except for affiliates who, at the date of the Merger Agreement, were affiliates of AMVESCAP and holders of common shares in the capital of Trimark Financial Corporation and except in respect of the conversion into or exchange of such shares for AMVESCAP Ordinary Shares, Exchangeable Shares or Debentures and any transfer of such securities), the Transfer Agent or the Agent) shall be responsible for any and all Stamp Taxes payable by any Person in connection with the transfer or issuance of such Person's shares or their exchange for AMVESCAP Ordinary Shares or the transfer or issue of AMVESCAP Ordinary Shares to such holder or Person pursuant to a redemption of the Exchangeable Shares, a liquidation of the Corporation, or on the exercise of the Liquidation Call Right, the Redemption Call Right or the Retraction Call Right (or any transaction or event completed in furtherance of such transfer, exchange or issuance); provided that, in no event shall any Person (other than the Corporation, its affiliates, the Transfer Agent and the Agent) be entitled to rely on the provisions of this section 16 in any action, suit or proceeding relating to Stamp Taxes brought against any holder of Exchangeable Shares or any Person to whom Exchangeable Shares are issued. In no event will the Corporation, its affiliates, the Transfer Agent or the Agent be responsible for any Stamp Taxes and the Corporation, its affiliates, the Transfer Agent and/or the Agent shall make such regulations and arrangements as are necessary to ensure that holders and such Persons pay all applicable Stamp Taxes. 107 -26- SCHEDULE A RETRACTION REQUEST [TO BE PRINTED ON EXCHANGEABLE SHARE CERTIFICATES] To: AMVESCAP Inc. ("Exchangeco") and AVZ Callco Inc. ("Callco") c/o CIBC mellon Trust Company 199 Bay Street Commerce Court West Securities Level Toronto (Ontario) Canada M5L 1G9 This notice is given pursuant to Section 6 of the provisions (the "SHARE PROVISIONS") attaching to the Exchangeable Shares of Exchangeco represented by this certificate and all capitalized words and expressions used in this notice that are defined in the Share Provisions have the meanings ascribed to such words and expressions in such Share Provisions. The undersigned hereby notifies Exchangeco that, provided that the Retraction Call Right referred to below has not been exercised, the undersigned desires to have Exchangeco redeem in accordance with Section 6 of the Share Provisions: o all share(s) represented by this certificate; or o _______ share(s) only represented by this certificate. The undersigned hereby notifies Exchangeco that the Retraction Date shall be _____________________. NOTE: The Retraction Date must be a Business Day and must not be less than 10 Business Days nor more than 15 Business Days after the date upon which this notice is received by Exchangeco. If no such Business Day is specified above, the Retraction Date shall be deemed to be the 15th Business Day after the date on which this notice is received by Exchangeco. The undersigned acknowledges the overriding Retraction Call Right of Callco to purchase all but not less than all the Retracted Shares from the undersigned and that this notice is and shall be deemed to be a revocable offer by the undersigned to sell the Retracted Shares to Callco in accordance with the Retraction Call Right on the Retraction Date for the Purchase Price and on the other terms and conditions set out in section 6(3) of the Share Provisions. This Retraction Request, and this offer to sell the Retracted Shares to Callco, may be revoked and withdrawn by the 108 -27- undersigned only by notice in writing given to Exchangeco at any time before the close of business on the Business Day immediately preceding the Retraction Date. The undersigned acknowledges that if, as a result of solvency provisions of applicable law, Exchangeco is unable to redeem all Retracted Shares, the Retracted Shares will be automatically exchanged pursuant to the Voting and Exchange Trust Agreement so as to require AMVESCAP to purchase the unredeemed Retracted Shares. The undersigned hereby represents and warrants to Callco and Exchangeco that the undersigned: o is (select one) o is not a non-resident of Canada for purposes of the Income Tax Act (Canada). THE UNDERSIGNED ACKNOWLEDGES THAT IN THE ABSENCE OF AN INDICATION THAT THE UNDERSIGNED IS NOT A NON-RESIDENT OF CANADA, WITHHOLDING ON ACCOUNT OF CANADIAN TAX MAY BE MADE FROM AMOUNTS PAYABLE TO THE UNDERSIGNED ON THE REDEMPTION OR PURCHASE OF THE RETRACTED SHARES. o The undersigned hereby represents and warrants to Callco and Exchangeco that the undersigned is not a person within the United States of America, its territories or possessions or any state thereof, or the District of Columbia (collectively, the "United States") or a U.S. person (within the meaning of Regulation S under the United States Securities Act of 1933, as amended) and is not making this Retraction Request for the account or benefit of a person within the United States or such a U.S. person. The undersigned hereby represents and warrants to Callco and Exchangeco that the undersigned has good title to, and owns, the share(s) represented by this certificate to be acquired by Callco or Exchangeco, as the case may be, free and clear of all liens, claims and encumbrances. - --------------------------- ------------------------------------------ ------------------------------------ (Date) (Signature of Shareholder) (Guarantee of Signature)
o Please check box if the certificates for AMVESCAP Ordinary Shares and any cheque(s) resulting from the retraction or purchase of the Retracted Shares are to be held for pick-up by the shareholder from the Transfer Agent, 109 -28- failing which such certificates and cheque(s) will be mailed to the last address of the shareholder as it appears on the register. NOTE: This panel must be completed and this certificate, together with such additional documents and payments (including, without limitation, any applicable Stamp Taxes) as the Transfer Agent may require, must be deposited with the Transfer Agent. The securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares will be issued and registered in, and made payable to, respectively, the name of the shareholder as it appears on the register of Exchangeco and the certificates for AMVESCAP Ordinary Shares and any cheque(s) resulting from such retraction or purchase will be delivered to such shareholder as indicated above, unless the form appearing immediately below is duly completed. Date: __________________ Name of Person in Whose Name Securities or Cheque(s) Are to be Registered, Issued or Delivered (please print): Street Address or P.O. Box: Signature of Shareholder: City, Province and Postal Code: Signature Guaranteed by: NOTE: If this Retraction Request is for less than all of the shares represented by this certificate, a certificate representing the remaining share(s) of Exchangeco represented by this certificate will be issued and registered in the name of the shareholder as it appears on the register of Exchangeco, unless the Share Transfer Power on the share certificate is duly completed in respect of such share(s). 110 SCHEDULE C REGULATORY APPROVALS CANADA o expiration or earlier termination of the waiting period under Part IX of the Competition Act (Canada) and receipt of an advance ruling certificate ("ARC") pursuant to the Competition Act (Canada) or, in the alternative to an ARC, a no-action letter from the Commissioner of Competition o if applicable, a determination by the Minister responsible for Investment Canada under the Investment Canada Act (Canada) that the Arrangement is of "net benefit to Canada" for purposes of such Act on terms and conditions satisfactory to AMVESCAP, acting reasonably o exemption orders from the Canadian Securities Regulatory Authorities from the registration and prospectus requirements with respect to the Exchangeable Share structure o approval of the Toronto Stock Exchange regarding the conditional listing of the Exchangeable Shares and the AMVESCAP Equity Subordinated Debentures o approval of the Canadian Securities Regulatory Authorities and notice to the unitholders of the Funds of the change in control of the manager of the Funds, as required pursuant to National Instrument 81-102 o consent of the Minister of Finance (Canada) to the transactions contemplated by the Arrangement under the sections 518(3)(a)(i) to (v) under the Bank Act (Canada) unless prior consent has been provided in a form acceptable to each of AMVESCAP and Trimark, acting reasonably o approval of Canadian Securities Regulatory Authorities, if necessary, regarding the acquisition of the Trimark Shares o the non-objection of the Director under the Securities Act pursuant to section 104 of the Regulation made under such Act and compliance with corresponding applicable provisions, if any, under securities legislation of the other provinces and territories of Canada to the indirect acquisition by AMVESCAP of beneficial ownership, control or direction of securities of another registrant o notice to the OSC pursuant to section 217 of the Regulation to the Securities Act and to the QSC pursuant to section 228 of the Regulation to the Securities Act (Quebec) and other applicable Canadian Securities Regulatory Authorities regarding the expected acquisition of the Trimark Shares by AMVESCAP o approval of applicable Canadian stock exchanges, if necessary, regarding amendments to and acceleration of the Trimark Options o requisite approvals pursuant to section 375(1) of the Trust and Loan Companies Act (Canada) 111 -2- UNITED STATES o if applicable, expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 UNITED KINGDOM o approval of the LSE and the UKLA to the publication of the AMVESCAP Circular (if required in accordance with the rules of such authorities) o approval of the LSE and the UKLA to the publication of the AMVESCAP Listing Particulars (if required in accordance with the rules of such authorities) o final consent of the UK Treasury under section 765 of the Income and Corporation Taxes Act 1988 to all of those transactions which require such consent and which are necessary to implement the transactions contemplated herein o the relevant approvals, if any, from the UK Secretary of State for Trade and Industry or the European Commission (as appropriate) on terms and conditions satisfactory to AMVESCAP, acting reasonably, or AMVESCAP obtaining confirmation on terms satisfactory to it that the transactions referred to in this Agreement or any matter relating thereto will not be referred to the UK Competition Commission o admission to the Official List of the UKLA and admission to trading on the LSE of the AMVESCAP Ordinary Shares to be issued at the Effective Time, in accordance with the applicable rules of such authorities 112 SCHEDULE F TERMS OF AMVESCAP EQUITY SUBORDINATED DEBENTURES ISSUER: o Exchangeco (the "ISSUER") and all of its obligations in respect of the Debentures will be fully and unconditionally guaranteed by AMVESCAP pursuant to a guarantee of AMVESCAP on terms and conditions mutually agreeable to Trimark and AMVESCAP each acting reasonably. ISSUE: o AMVESCAP Equity Subordinated Debentures (the "DEBENTURES"). The Debentures will be issued under a trust indenture (the "INDENTURE"). AMVESCAP shall be a party to the Indenture, which will incorporate the guarantee of AMVESCAP. Holders of Debentures will also be issued a Certificate of Entitlement which will allow holders to receive, on a conversion of the Debentures (or such other event that results in a holder receiving Exchangeable Shares) and for no additional consideration, the voting rights, the automatic exchange right and the automatic exchange on liquidation (and any other similar rights that may be available from time to time to holders of Exchangeable Shares). ISSUE PRICE: o $1,000 per Debenture INTEREST: o 6.00% per annum, payable semi-annually, commencing 6 months from the Effective Date TERM: o 3 years MATURITY AMOUNT: o $1,000 per Debenture. Unless an Event of Default has occurred and is continuing, Issuer may, upon not less than 10 Business Days and not more than 20 Business Days prior notice, in lieu of paying the principal amount of the Debentures in cash at maturity, deliver that number of Exchangeable Shares obtained by dividing the principal amount of the Debentures by 95% of the then Current Market Price (as defined below) of the AMVESCAP Ordinary Shares (the "SHARES"). CONVERSION PRIVILEGE: o Each outstanding Debenture will be convertible (subject to notice and other usual limitations) at any time and from time to time, at the option of the holder, into the Conversion Number of Exchangeable Shares. 113 -2- o The Conversion Number of Exchangeable Shares will be calculated as of the date of the conversion as: the Conversion Value, being the lesser of the AMVESCAP Share Value (as defined below) and $1,200, divided by the then Current Market Price of the Shares. o The AMVESCAP Share Value as at any date will be the amount equal to the AMVESCAP Share Rate multiplied by the Current Market Price of the Shares as at such date. o The AMVESCAP Share Rate will be equal to $1,000 divided by (i) the Closing Price if the Closing Price Ratio is equal to or greater than 0.875 and is less than or equal to 1.125 or (ii) $18.8193 if the Closing Price Ratio is less than 0.875 or (iii) $24.1963 if the Closing Price Ratio is greater than 1.125. o The Conversion Number of Exchangeable Shares is subject to adjustment upon the occurrence of certain events such as the subdivision or consolidation of the outstanding Exchangeable Shares or the making of certain distributions to the holders of Exchangeable Shares (other than customary dividends paid in the ordinary course) OPTIONAL PAYMENT IN CASH o The Issuer has the option in lieu of UPON CONVERSION: delivering Exchangeable Shares upon a conversion of Debentures, to pay the Conversion Value in cash for each $1,000 principal amount of Debentures converted. REDEMPTION: o At any time, subject to not less than 20 days and not more than 30 days prior notice, Issuer has the right to redeem each $1,000 principal amount of Debentures for cash at a price of $1,200 plus accrued and unpaid interest on such $1,000 principal amount (the "REDEMPTION AMOUNT"). Unless an Event of Default has occurred and is continuing, Issuer may satisfy the Redemption Amount by the delivery of a number of Exchangeable Shares equal to the Redemption Amount divided by 95% of the Current Market Price at the date of notice of redemption. 114 -3- CURRENT MARKET PRICE: o In respect of a Share on any date, the quotient obtained by dividing (a) the aggregate of the Daily Value of Trades for each day during the period of 20 consecutive trading days ending not more than three trading days before such date; by (b) the aggregate volume of Shares used to calculate such Daily Value of Trades; where "Daily Value of Trades" means, in respect of the Shares on any trading day, the Canadian dollar equivalent of the product of (a) the volume weighted average price of Shares on the LSE (or, if the Shares are not then listed on the LSE, on such other stock exchange or automated quotation system on which the Shares are listed or quoted, as the case may be, as may be selected by the board of directors of AMVESCAP for such purpose) on such date, as determined by Bloomberg L.P. or another reputable, third party information source selected by the board of directors of AMVESCAP; and (b) the aggregate volume of Shares traded on such day on the LSE or such other stock exchange or automated quotation system and used to calculate such volume weighted average price; provided that any such selections by the board of directors of AMVESCAP shall be conclusive and binding. RANK: o The Debentures will be subordinated to all other indebtedness and obligations of Issuer and of AMVESCAP. CURRENCY: o All prices in this Schedule are in Canadian dollars. AMVESCAP Ordinary Share prices will be converted into their Canadian dollar equivalent at the exchange rates on the dates of such prices. LISTING: o The Debentures will be listed on the Toronto Stock Exchange. MERGER: o The Indenture will provide that, so long as any Debentures remain outstanding, the Issuer will continue to be a wholly-owned subsidiary of AMVESCAP. In addition, the Indenture will provide that, so long as any Debentures remain outstanding, subject to certain exceptions, AMVESCAP will not 115 -4- enter into any transaction (whether by way of merger, consolidation, reorganization, amalgamation (except with one or more of its wholly-owned subsidiaries), conveyance, transfer, lease, sale or otherwise) whereby all or substantially all of its undertaking or assets would become the property of another person unless AMVESCAP's successor assumes all of the covenants and obligations of AMVESCAP under the Indenture. EVENTS OF DEFAULT: o The Indenture will contain certain Events of Default consistent with other equity subordinated debenture issues in the Canadian market, including, without limitation: (i) failure to pay principal or interest when due (there will be a 30 day cure period for failure to pay interest when due); (ii) default in the performance, or breach, of any other covenant or agreement of the Issuer under the Indenture or the Debentures or AMVESCAP under its guarantee and the continuance of such default for 60 days after written notice to the Company by the Trustee or by the holders of not less than 25% in principal amount of outstanding Debentures; (iii) the occurrence of any default with respect to any other indebtedness of the Issuer or AMVESCAP having an outstanding principal amount of U.S.$50 million or more, that has caused the holder thereof to declare such indebtedness to be due and payable prior to its maturing and such acceleration is not rescinded or annulled within 10 days; and (iv) certain events of bankruptcy, insolvency or reorganization affecting the Issuer or AMVESCAP. 116 SCHEDULE G TRIMARK REPRESENTATIONS AND WARRANTIES (a) Organization. Each of Trimark and the Trimark Material Subsidiaries has been duly incorporated or formed under all applicable Laws, is validly subsisting and has full corporate or legal power and authority to own its properties and conduct its businesses as currently owned and conducted. The only material subsidiaries of Trimark are the Trimark Material Subsidiaries. All of the outstanding shares and other ownership interests of the Trimark Material Subsidiaries are held directly or indirectly by Trimark and are validly issued, fully paid and non-assessable and all such shares and other ownership interests are owned directly or indirectly by Trimark, free and clear of all material liens, claims or encumbrances, except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP or pursuant to restrictions on transfers contained in constating documents, and except as aforesaid there are no outstanding options, rights, entitlements, understandings or commitments (contingent or otherwise) regarding the right to acquire any such shares or other ownership interests in any of the Trimark Material Subsidiaries. Trimark has disclosed in writing to AMVESCAP in a form acceptable to AMVESCAP the names and jurisdictions of incorporation of each of the Trimark Material Subsidiaries. Each of the Funds are (i) duly incorporated or are duly organized as trusts, and are validly existing or are assets of an insurance company held on a segregated basis pursuant to applicable insurance legislation, and (ii) up-to-date in the filing of all information required to be filed according to the applicable Laws. No proceedings have been taken or authorized by Trimark or any of its subsidiaries or, to Trimark's knowledge (after due enquiry), by any other Person, with respect to the bankruptcy, insolvency, liquidation, dissolution or winding up of any of the Funds. (b) Capitalization. The authorized capital of Trimark consists of an unlimited number of Trimark Common Shares and an unlimited number of preferred shares, issuable in series. As of the date hereof, there are 94,275,450 Trimark Common Shares issued and outstanding, and options to acquire an aggregate of 7,280,150 Trimark Common Shares are granted and outstanding under the Trimark Stock Option Plan. As of the date hereof, there are no preferred shares issued or outstanding. Except as described in the preceding sentences of this Section (b) and in Section (a) above, there are no options, warrants, conversion privileges or other rights, agreements, arrangements or commitments (pre-emptive, contingent or otherwise) obligating Trimark or any Trimark 117 -2- Material Subsidiary to issue or sell any shares of Trimark or any of the Trimark Material Subsidiaries or securities or obligations of any kind convertible into or exchangeable for any shares of Trimark or any Trimark Material Subsidiary. All outstanding Trimark Common Shares have been duly authorized and are validly issued and outstanding as fully paid and non-assessable shares, free of pre-emptive rights. Except as described in the preceding sentences of this Section (b), there are no outstanding bonds, debentures or other evidences of indebtedness of Trimark or any subsidiary having the right to vote (or that are convertible for or exercisable into securities having the right to vote) with the holders of the Trimark Common Shares on any matter. Except as has been set forth in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP or as Publicly Disclosed by Trimark, there are no outstanding contractual obligations of Trimark or any of the Trimark Material Subsidiaries to repurchase, redeem or otherwise acquire any of its outstanding securities or with respect to the voting or disposition of any outstanding securities of any of the Trimark Material Subsidiaries. (c) Authority and No Violation. (i) Subject to paragraphs (A) and (B) below, Trimark has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by Trimark and (subject to obtaining the Regulatory Approvals) the consummation by Trimark of the transactions contemplated by this Agreement have been duly authorized by its Board of Directors and no other corporate proceedings on its part are necessary to authorize this Agreement or the transactions contemplated hereby, other than: (A) with respect to the Trimark Circular and other matters relating solely thereto, the approval of the Board of Directors of Trimark; and (B) with respect to the completion of the Arrangement, the approval of the Trimark Securityholders. (ii) This Agreement has been duly executed and delivered by Trimark and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency and other applicable Laws affecting creditors' rights generally, and to general principles of equity. (iii) The Board of Directors of Trimark (Messrs. Krembil, Labatt, Binnington, Howe, Badeau and Waitzer having declared their interest and abstaining from voting thereon) has (A) determined as of the date hereof unanimously that the Arrangement is fair to the holders of the Trimark Common Shares and is in the best interests of Trimark, (B) received an opinion from RBC Dominion Securities Inc. to the effect 118 -3- that, as of the date of this Agreement, the Arrangement is fair from a financial point of view to Trimark shareholders and (C) determined as of the date hereof to unanimously recommend that the holders of the Trimark Common Shares vote in favour of the Arrangement. Each of Trimark's directors has advised Trimark that, as of the date hereof, they intend to vote Trimark Common Shares held by them in favour of the Arrangement and (except with respect to Messrs. Binnington, Howe, Krembil and Labatt), unless the Board of Directors of Trimark shall have failed to recommend or shall have withdrawn, modified or changed in a manner adverse to AMVESCAP its approval or recommendation of this Agreement or the Arrangement or shall have approved or recommended any unsolicited Superior Proposal in accordance with Section 4.6, will so represent in the Trimark Circular. Trimark is not subject to a shareholder rights plan or "poison pill" or similar plan. (iv) The approval of this Agreement, the execution and delivery by Trimark of this Agreement and the performance by it of its obligations hereunder and the completion of the Arrangement and the transactions contemplated thereby, will not, except as disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP: (A) result in a violation or breach of, require any consent to be obtained under or give rise to any termination, purchase or sale rights or payment obligation under any provision of: (I) its or any Trimark Material Subsidiary's certificate of incorporation, articles, by-laws or other charter documents, including any unanimous shareholder agreement or any constating document of a Fund; (II) any Laws, judgment or decree (subject to obtaining the Regulatory Approvals relating to Trimark), except to the extent that the violation or breach of, or failure to obtain any consent under, any Laws, judgment or decree would not, individually or in the aggregate, have a Material Adverse Effect on Trimark; or (III) except as would not, individually or in the aggregate, have a Material Adverse Effect on Trimark, any contract, agreement, license, franchise or permit to which Trimark or any subsidiary or any Fund is party or by which it is bound or subject or is the beneficiary; 119 -4- (B) give rise to any right of termination or acceleration of indebtedness of Trimark or any subsidiary or any Fund, or cause any such indebtedness to come due before its stated maturity, or cause any available credit of Trimark or any subsidiary or any Fund to cease to be available, other than as would not, individually or in the aggregate, have a Material Adverse Effect on Trimark; or (C) except as would not, individually or in the aggregate, have a Material Adverse Effect on Trimark or a Material Adverse Effect on the Funds (taken in the aggregate), result in the imposition of any encumbrance, charge or lien upon any of its assets or the assets of any Trimark Material Subsidiary or any Fund, or restrict, hinder, impair or limit the ability of Trimark or any Trimark Material Subsidiary to carry on the business of Trimark or any Trimark Material Subsidiary as and where it is now being carried on. No consent, waiver, approval, order or authorization of, or declaration or filing with, any Governmental Entity is required to be obtained by Trimark and its subsidiaries and the Funds in connection with the execution and delivery of this Agreement or the consummation by Trimark of the transactions contemplated hereby other than (A) any approvals required by the Interim Order, (B) the Final Order, (C) filings with the Director under the OBCA, (D) the Regulatory Approvals relating to Trimark and its subsidiaries and (E) any other consents, approvals, orders, authorizations, declarations or filings of or with a Governmental Entity which have been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP or which, if not obtained, would not, individually or in the aggregate, have a Material Adverse Effect on Trimark. (d) No Defaults. Subject to obtaining the Regulatory Approvals relating to Trimark and its subsidiaries and except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, neither Trimark nor any of its subsidiaries nor any Fund is in default under, and there exists no event, condition or occurrence which, after notice or lapse of time or both, would constitute such a default under, any contract, agreement, license or franchise to which it is a party which would, if terminated due to such default, cause a Material Adverse Effect on Trimark. (e) Absence of Certain Changes or Events. Except as has been (A) disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP or (B) Publicly Disclosed by Trimark, or (C) Publicly Disclosed by the Funds, each of Trimark, the Trimark Material Subsidiaries and the Funds has conducted 120 -5- its business only in the ordinary and regular course of business consistent with past practice and there has not occurred: (i) a Material Adverse Change with respect to Trimark or any of the Funds; (ii) any damage, destruction or loss not fully covered by insurance that could reasonably be expected to have a Material Adverse Effect on Trimark; (iii) any redemption, repurchase or other acquisition of Trimark Common Shares by Trimark or any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to Trimark Common Shares, other than regular quarterly dividends on the Trimark Common Shares; (iv) any material increase in or modification of the compensation payable or to become payable by it to any of its directors or officers, or any grant to any such director or officer of any increase in severance or termination pay; (v) any material increase in or modification of any bonus, pension, employee insurance or benefit arrangement (including the granting of stock options, restricted stock awards or stock appreciation rights) other than the adoption of the Trimark Deferred Share Unit Plan and the acceleration of vesting of unvested Trimark Shares under the Trimark Employee Profit Sharing Plan, made to, for or with any of its directors or officers; (vi) any acquisition or sale of its property or assets aggregating 10% or more of Trimark's total consolidated property and assets as at March 31, 1999 other than in the ordinary and regular course of business consistent with past practice; (vii) any entering into, amendment of, relinquishment, termination or non-renewal by it of any material contract, agreement, license, franchise, lease transaction, commitment or other right or obligation that could reasonably be expected to have a Material Adverse Effect on Trimark; (viii) any resolution to approve a split, consolidation or reclassification of any of its outstanding shares or in respect of each of the Funds, any of its outstanding units; (ix) any material change in its accounting methods, principles or practices; 121 -6- (x) any guarantee of the payment of material indebtedness or any incurrence of material indebtedness for money borrowed or any issue or sale of any debt securities except in the ordinary and regular course of business consistent with past practice; or (xi) except in the usual, ordinary and regular course of business and consistent with past practice: (A) any satisfaction or settlement of any claims or liabilities prior to the same being due, which were, individually or in the aggregate, material; or (B) any grant of any waiver, exercise of any option or relinquishment of any contractual rights which were, individually or in the aggregate, material. (f) Employment Matters. (i) Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, neither Trimark nor any Trimark Material Subsidiary nor any Fund is a party to any agreement, obligation or understanding providing for severance or termination payments to, or any employment agreement with, any director or officer other than any common law obligations of reasonable notice of termination or pay in lieu thereof and any statutory obligations. (ii) Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, neither Trimark nor any Trimark Material Subsidiary nor any Fund is subject to any litigation, actual or, to the knowledge of Trimark, threatened, relating to employment or termination of employment of employees or independent contractors, other than those claims or such litigation as would, individually or in the aggregate, not have a Material Adverse Effect on Trimark. (iii) Trimark, all Trimark Material Subsidiaries and all Funds have operated in accordance with all applicable Laws with respect to employment and labour, including, but not limited to, employment and labour standards, occupational health and safety, employment equity, pay equity, workers' compensation, human rights and labour relations and there are no current, pending or, to the knowledge of Trimark, threatened proceedings before any board or tribunal with respect to any of the above areas, other than as has been set forth in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP or where the failure to so operate or such proceedings would, individually or in the aggregate, not have a Material Adverse Effect on Trimark. (iv) Except as has been Publicly Disclosed by Trimark or disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, there are no outstanding stock appreciation rights, 122 -7- phantom equity or similar rights, agreements, arrangements or commitments based upon the book value, income or any other attribute of Trimark, any Trimark Material Subsidiary or any Fund. (g) Financial Statements. Each of (i) the audited consolidated financial statements for Trimark as at and for each of the 12-month periods ended March 31, 1999 and 1998; (ii) the unaudited consolidated financial statements for Trimark as at and for the 12-month period ended March 31, 2000; and (iii) the audited financial statements for each of the Funds for the fiscal years ended December 31, 1999 and 1998 have been prepared in accordance with Canadian generally accepted accounting principles (subject, in the case of such unaudited financial statements, to the absence of notes and to usual year-end adjustments), and such financial statements present fairly, in all material respects, the consolidated financial position and results of operations of Trimark and its subsidiaries or of such Fund, as applicable, as of the respective dates thereof and for the respective periods covered thereby, subject, in the case of such unaudited financial statements, to usual year-end adjustments. (h) Books and Records. The financial books, records and accounts of Trimark, its subsidiaries and each of the Funds, in all material respects, (i) have been maintained in accordance with good business practices on a basis consistent with prior years, (ii) are stated in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of Trimark and its subsidiaries and the Funds and (iii) accurately and fairly reflect the basis for the Trimark consolidated financial statements or such Fund's financial statements, as applicable. Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, Trimark's and the Trimark Material Subsidiaries' corporate minute books contain minutes of all meetings and resolutions of the directors (including all committees of directors) and shareholders held to December 31, 1999 has been provided to AMVESCAP, and no matters (other than the executive severance agreements referred to in Section 4.4(e)) were considered at any meetings subsequent to December 31, 1999 which, if effected subsequent to the date hereof and prior to the Effective Date, would constitute a breach of Section 4.3(a). (i) Litigation, Etc. Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP or Publicly Disclosed by Trimark, there is no claim, action, proceeding or investigation pending or, to the knowledge of Trimark, threatened against Trimark, any Trimark Material Subsidiary or any Fund before any court or Governmental Entity that would reasonably be expected to have a Material Adverse Effect on Trimark or to prevent or materially delay consummation of the transactions contemplated by this Agreement or the Arrangement. Neither Trimark nor any Trimark Material Subsidiary, nor any Fund, nor their respective assets and properties, 123 -8- is subject to any outstanding judgment, order, writ, injunction or decree that has had or is reasonably likely to have a Material Adverse Effect on Trimark or that would prevent or materially delay consummation of the transactions contemplated by this Agreement or the Arrangement. Except as has been disclosed in writing previously by Trimark to AMVESCAP in a form acceptable to AMVESCAP, Trimark and the Trimark Material Subsidiaries are not to their knowledge subject to any warranty, negligence, performance or other claims or disputes or potential claims or disputes in respect of products or services currently being delivered or previously delivered, and to their knowledge there are no events or circumstances which could reasonably be expected to give rise to any such claims or disputes or potential claims or disputes, in each case which could reasonably be expected to have a Material Adverse Effect on Trimark. (j) Tax Matters. Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP: (i) Trimark, each of the Trimark Material Subsidiaries and each Fund have filed, or caused to be filed, all material Tax Returns required to be filed by them (all of which returns were correct and complete in all material respects) and have paid, or caused to be paid, all material amounts of Taxes shown to be due and payable thereon, and the most recently published financial statements for Trimark and each Fund contain an adequate provision in accordance with Canadian generally accepted accounting principles for all material amounts of Taxes payable in respect of each period covered by such financial statements and all prior periods to the extent such Taxes have not been paid, whether or not due and whether or not shown as being due on any Tax Returns. Trimark, each of the Trimark Material Subsidiaries and each Fund have made adequate provision in accordance with Canadian generally accepted accounting principles in their books and records for any material amounts of Taxes accruing in respect of any accounting period which has ended subsequent to the period covered by such financial statements. (ii) Neither Trimark nor any Trimark Material Subsidiary nor any Fund has received any written notification that any issues involving a material amount of Taxes have been raised (and are currently pending) by Canada Customs and Revenue Agency, the United States Internal Revenue Service or any other taxing authority, including, without limitation, any sales tax authority, in connection with any of the Tax Returns referred to above and no waivers of statutes of limitations have been given or requested with respect to Trimark or any Trimark Material Subsidiary or any Fund. All liability of Trimark, the Trimark Material Subsidiaries and the Funds for income taxes has been 124 -9- assessed for all fiscal years up to and including the fiscal year ended March 31, 1999 (with respect to Trimark and Trimark Investment Management Inc.) and December 31, 1998 (with respect to Trimark Trust and the Funds). To the knowledge of Trimark, there are no proposed in writing (but unassessed) additional Taxes involving a material amount of Taxes and none has been asserted in writing. No Tax liens have been filed for material amounts of Taxes other than for Taxes not yet due and payable. Neither Trimark nor any of the Trimark Material Subsidiaries nor any Fund is a party to any Tax sharing or other similar agreement or arrangement of any nature with any other person (other than Trimark or any of its subsidiaries) pursuant to which Trimark or any of the Trimark Material Subsidiaries or any Fund has or could have any material liabilities in respect of Taxes, other than any liability arising under an agreement providing for the sale or other disposition of property by Trimark or any of the Trimark Material Subsidiaries. (iii) Each Fund which is a mutual fund within the meaning of the Securities Act (a "MUTUAL FUND"), other than Trimark Global High Yield Bond Pooled Fund currently meets the requirements set out in the Tax Act to qualify as a "mutual fund trust", and each such Mutual Fund has so qualified at all relevant times since the date such Mutual Fund was established. At all times during which the units of a Fund purported not to be or were represented not to constitute "foreign property" under the Tax Act, such Fund has restricted its investment in "foreign property" so that its units have not at any time during such period constituted foreign property for registered retirement savings plans, registered retirement income funds, registered pension funds and plans and deferred profit sharing plans. Each of Trimark Canadian Fund, Trimark RSP Equity Fund, Trimark Select Canadian Growth Fund, Trimark Enterprise Fund, Trimark Canadian Resources Fund, Trimark Canadian Small Companies Fund, Trimark Enterprise Small Cap Fund, Trimark Income Growth Fund, Trimark Select Balanced Fund, Trimark Interest Fund, Trimark Government Income Fund, Trimark Canadian Bond Fund, Trimark Advantage Bond Fund, The Americas RSP Fund, Trimark Discovery RSP Fund, Trimark Europlus RSP Fund, Trimark Indo-Pacific RSP Fund, Trimark Select Growth RSP Fund, Trimark US Companies RSP Fund, Trimark Global Balanced RSP Fund, Trimark Global High Yield Bond RSP Fund, Trimark International Companies RSP Fund and Trimark RSP Fund is a "registered investment" under the Tax Act for registered retirement savings plans, registered retirement income funds and deferred profit sharing plans under the Tax Act and has been a registered investment continuously for all periods when the Fund held itself out to be a registered investment. For each Fund, distributions or allocations, as 125 -10- the case may be, have been made in such amounts to holders of units thereof or interests therein such that there is no liability (contingent or otherwise), after taking into account any refund of Tax to which the Fund is entitled, of the Fund or any actual or deemed trustee thereof to pay Tax for any period ending on or before the date hereof. (iv) Trimark and, to the knowledge of Trimark after due enquiry, any other trustees and former trustees of all the registered plans (including registered retirement savings plans, registered retirement income funds and registered education savings plans) made available to investors by Trimark have complied in all material respects with all of their obligations under the Tax Act and pension and other laws with respect to such plans, including withholding and remittance obligations, "locking-in" obligations and the payment or recognition in the financial statements of the applicable plan of any liability or potential liability for taxes. All of Trimark's registered plans are properly registered with applicable tax authorities, up to date in all applicable filings and comply in all material respects with all requirements imposed under the Tax Act and other applicable Law. (v) "TAX" and "TAXES" means, with respect to any entity, all income taxes (including any tax on or based upon net income, gross income, income as specially defined, earnings, profits or selected items of income, earnings or profits) and all capital taxes, gross receipts taxes, environmental taxes, sales taxes, use taxes, ad valorem taxes, value added taxes, transfer taxes, franchise taxes, license taxes, withholding taxes, payroll taxes, employment taxes, Canada or Quebec Pension Plan premiums, excise, severance, social security premiums, workers' compensation premiums, unemployment insurance or compensation premiums, stamp taxes, occupation taxes, premium taxes, property taxes, windfall profits taxes, alternative or add-on minimum taxes, goods and services tax, customs duties or other taxes of any kind whatsoever, together with any interest and any penalties or additional amounts imposed by any taxing authority (domestic or foreign) on such entity, and any interest, penalties, additional taxes and additions to tax imposed with respect to the foregoing. (vi) For purposes of this Section (j), the term "MATERIAL AMOUNT OF TAXES" shall mean an amount of Taxes that is material to Trimark and its subsidiaries taken as a whole or material to a Fund, as applicable. (k) Pension and Employee Benefits. (i) Trimark has disclosed in writing to AMVESCAP, in a form acceptable to AMVESCAP, all material employee benefit, health, welfare, supplemental unemployment benefit, bonus, pension, profit sharing, 126 -11- deferred compensation, stock option, stock compensation, stock purchase, retirement, hospitalization insurance, medical, dental, legal, disability and similar plans or arrangements or practices, whether written or oral, which are maintained by Trimark or any Trimark Material Subsidiary (collectively referred to as the "TRIMARK PLANS"). The provisions of the United States Employee Retirement Income Security Act of 1974, as amended and any regulations thereunder do not apply to any of the Trimark Plans. (ii) To Trimark's knowledge, no step has been taken, no event has occurred and no condition or circumstance exists that has resulted in or could reasonably be expected to result in any Trimark Plan being ordered or required to be terminated or wound up in whole or in part or having its registration under applicable Laws refused or revoked, or being placed under the administration of any trustee or receiver or regulatory authority or being required to pay any material Taxes, penalties or levies under applicable Laws. Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, to Trimark's knowledge, there are no actions, suits, claims (other than routine claims for payment of benefits in the ordinary course), trials, demands, investigations, arbitrations or other proceedings which are pending or threatened in respect of any of the Trimark Plans or their assets which individually or in the aggregate would have a Material Adverse Effect on Trimark. (iii) Trimark has disclosed in writing to AMVESCAP, in a form acceptable to AMVESCAP, true, correct and complete copies of all of the Trimark Plans (or, in the case of any unwritten Trimark Plan, a description thereof) together with financial information and statements with respect to each Trimark Plan, and current plan summaries, booklets and personnel manuals. Trimark has made available to AMVESCAP a true and complete copy of the most recent report filed with applicable Governmental Entities with respect to each Trimark Plan in respect of which such a report was required. (iv) Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, all of the Trimark Plans are in compliance in all material respects with all applicable Laws and their terms. Neither Trimark nor any of its subsidiaries have any payment obligations under any Trimark Plans other than to make contributions as they become due in the ordinary course, and such obligations have been fulfilled to the date hereof and to make any payments under Trimark's short term disability plan. 127 -12- (v) Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, the entry into or performance by Trimark of this Agreement and the completion of the Arrangement and the transactions contemplated thereby will not result in any payment (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any director or employee of Trimark or any Trimark Material Subsidiary or increase any benefits otherwise payable under any Trimark Plan or result in the acceleration of time of payment or vesting of any such benefits except to accelerate the vesting of ownership of unvested Trimark Common Shares under the Employee Profit Sharing Plan. (l) Reports. Trimark has filed with each of the Canadian Securities Regulatory Authorities true and complete copies of all forms, reports, schedules, statements and other documents required to be filed by it (such forms, reports, schedules, statements and other documents, including any financial statements or other documents, including any schedules included therein, are referred to as the "TRIMARK DOCUMENTS"). The Trimark Documents at the time filed (i) did not contain any misrepresentation (as defined in the Securities Act) and (ii) complied in all material respects with the requirements of applicable securities Laws. Trimark has not filed any confidential material change report with the OSC or any other securities authority or regulator or any stock exchange or other self-regulatory authority which at the date hereof remains confidential. Trimark is a reporting issuer in, and is not in default in any material respect of any requirement of the securities Laws of, each province and territory in Canada. (m) Fund Reports. Each of the Mutual Funds (except Trimark Global High Yield Bond Pooled Fund) has filed with each of the Canadian Securities Regulatory Authorities true and complete copies of all forms, reports, schedules, statements and other documents required to be filed by it (such forms, reports, schedules, statements and other documents, including any financial statements or other documents, including any schedules included therein, are referred to as the "FUND DOCUMENTS"). The Fund Documents at the time filed (i) did not contain any misrepresentation (as defined in the Securities Act) and (ii) complied in all material respects with the requirements of applicable securities Laws including all requirements imposed by discretionary orders granted by any Canadian Security Regulatory Authority. None of the Mutual Funds has filed any confidential material change report with the OSC or any other securities authority or regulator or any stock exchange or other self-regulatory authority which at the date hereof remains confidential. The securities issued by each Mutual Fund are duly qualified for distribution to the public in each of the provinces and territories of Canada under applicable securities Laws. Each Mutual Fund is a reporting issuer in, and is not in 128 -13- default in any material respect of any requirement of the securities Laws of, each province and territory of Canada. (n) Compliance with Laws. Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP or Publicly Disclosed by Trimark, Trimark, the Trimark Material Subsidiaries and the Funds have complied with and are not in violation of any applicable Laws, orders, judgments and decrees other than non-compliance or violations which would not, individually or in the aggregate, have a Material Adverse Effect on Trimark. Without limiting the generality of the foregoing, all securities of Trimark and of each of the Funds (including, all options, rights or other convertible or exchangeable securities) have been issued in compliance, in all material respects, with all applicable securities Laws and all securities to be issued upon exercise of any such options, rights and other convertible or exchangeable securities will be issued in compliance with all applicable securities Laws, or in accordance with the terms of the exemptive relief granted to Trimark or the Funds by Canadian Securities Regulatory Authorities. (o) Restrictions on Business Activities. Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP or Publicly Disclosed by Trimark, there is no agreement, judgment, injunction, order or decree binding upon Trimark, any subsidiary or any Fund that has or could reasonably be expected to have the effect of prohibiting, restricting or materially impairing any business activity of Trimark, any subsidiary or affiliate or any Fund, any acquisition of property by Trimark or any subsidiary or affiliate or the conduct of business by Trimark, any subsidiary or affiliate or any Fund as currently conducted (including following the Arrangement) other than such agreements, judgments, injunctions, orders or decrees which would not, individually or in the aggregate, have a Material Adverse Effect on Trimark or AMVESCAP. (p) Property. Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, Trimark and each Trimark Material Subsidiary have good and sufficient title to the real property interests, including fee simple estate of and in real property, leases, easements, rights of way, permits or licences from land owners or authorities permitting the use of land by Trimark or such Trimark Material Subsidiary, necessary to permit the operation of its businesses as presently owned and conducted except for such failure of title that would individually or in the aggregate not have a Material Adverse Effect on Trimark. Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, Trimark is not a party to, or under any agreement to become a party to, any lease with respect to real property which if terminated could reasonably be expected to have a Material Adverse Effect on Trimark. 129 -14- (q) Licences, Etc. Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, Trimark and each Trimark Material Subsidiary and each Fund owns, possesses, or has obtained and is in compliance with, all licences, permits, certificates, orders, grants and other authorizations of or from any Governmental Entity necessary to conduct its businesses as now conducted except for such failure that would individually or in the aggregate not have a Material Adverse Effect on Trimark. Trimark Investment Management Inc. is registered as a limited market dealer and an investment counsel/portfolio manager in the Province of Ontario and a mutual fund dealer in the provinces of Ontario, Nova Scotia, Prince Edward Island, Newfoundland, New Brunswick, Quebec, Alberta, Saskatchewan and British Columbia, a broker/dealer in the Province of Manitoba and a broker in Nunavut, Yukon and the Northwest Territories. Trimark Trust is licensed under the trust legislation of each of the provinces of Canada. Trimark Trust's authorized asset to capital ratio and borrowing ratio is less than or equal to 20:1, calculated in accordance with the provisions of relevant trust legislation. (r) Registration Rights. No holder of securities issued by Trimark has any right to compel Trimark to register or otherwise qualify such securities for public sale in Canada or the United States. (s) Intellectual Property. Trimark has disclosed in writing in a form acceptable to AMVESCAP a complete and accurate list of all registered trade-marks, service marks, copyrights, industrial designs, patents, design patents and all applications therefor of Trimark, its subsidiaries or any of the Funds ("TRIMARK IP"). Except as disclosed in writing in a form acceptable to AMVESCAP, none of Trimark nor its subsidiaries nor any of the Funds has received written notice or is aware that its use of Trimark IP infringes upon or breaches the industrial or intellectual property rights of any other Person in any material respect. Except as disclosed in writing in a form acceptable to AMVESCAP, none of Trimark nor any of its subsidiaries nor any of the Funds has commenced legal proceedings relating to an infringement by any Person of the Trimark IP. Trimark and each of the Funds has or has rights to use all of the intellectual property necessary to conducts its business as currently conducted. Trimark or one of Trimark's Material Subsidiaries has valid licences from third parties (and no such licence may be terminated at the discretion of a third party upon a change of control of Trimark or any of its Material Subsidiaries) in respect of or is the sole owner of all computer software, computer systems, databases, platforms, programs, applications, telephone and/or communication systems, designs and any related good will ("COMPUTER SYSTEMS") necessary to conduct its business as currently carried on. Except as has been disclosed in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, no current or former employee, independent contractor or consultant of Trimark or any Trimark Material Subsidiary has 130 -15- any rights in respect of or ownership interests in any of the Computer Systems other than those which are validly licensed to Trimark. (t) Non-Arm's Length Transactions. Except as has been set forth in writing by Trimark to AMVESCAP in a form acceptable to AMVESCAP, there are no material contracts, commitments, agreements, arrangements or other transactions between Trimark or any of its subsidiaries or any Fund, on the one hand, and any (i) officer or director of Trimark or any of its subsidiaries, (ii) record or beneficial owner of five percent or more of the voting securities of Trimark or (iii) affiliate of any such officer, director or beneficial owner, on the other hand. (u) Insurance. Trimark has provided or made available to AMVESCAP true, correct and complete copies of all material policies of insurance to which any of Trimark and its subsidiaries are a party or are a beneficiary or named insured. Trimark and its subsidiaries maintain insurance coverage with reputable insurers in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to that of Trimark and its subsidiaries (taking into account the cost and availability of such insurance). (v) Related Party Investments. To Trimark's knowledge after due enquiry, no Person related to Trimark (as that term is interpreted for purposes of the Tax Act) with Trimark or any subsidiary of Trimark, beneficially holds, directly or indirectly, any material number of units of any of the Funds or held any material number of such units as at December 31, 1999. (w) Material Facts. Trimark has attempted in good faith to deliver all documents under its control and the control of the Trimark Material Subsidiaries or the Funds and their respective advisors that have been requested by AMVESCAP or its advisors, and has not withheld any material fact in responding to the inquiries made to it in writing by AMVESCAP or its advisors in connection with the transactions contemplated by this Agreement. 131 SCHEDULE H AMVESCAP REPRESENTATIONS AND WARRANTIES (a) Organization. Each of AMVESCAP and the AMVESCAP Material Subsidiaries has been duly incorporated or formed under all applicable Laws, is validly subsisting and has full corporate or legal power and authority to own its properties and conduct its businesses as currently owned and conducted. All of the outstanding shares and other ownership interests of the AMVESCAP Material Subsidiaries which are held directly or indirectly by AMVESCAP are validly issued and fully paid and all such shares and other ownership interests are owned directly or indirectly by AMVESCAP, subject to certain liens, claims and encumbrances. Except as Publicly Disclosed by AMVESCAP or as has been set forth in writing by AMVESCAP to Trimark in a form acceptable to Trimark, there are no outstanding options, rights, entitlements, understandings or commitments (contingent or otherwise) regarding the right to acquire any such shares or other ownership interests in any of the AMVESCAP Material Subsidiaries. AMVESCAP has disclosed in writing to Trimark in a form acceptable to Trimark the names and jurisdictions of incorporation of each of the AMVESCAP Material Subsidiaries. (b) Capitalization. The authorized capital of AMVESCAP consists of 850,800,000 AMVESCAP Ordinary Shares, 25 pence par value, Shares, of which 676,276,000 AMVESCAP Ordinary Shares were issued and outstanding at March 31, 2000. Except for employee stock options pursuant to employee compensation plans, there are no options, warrants, conversion privileges or other rights, agreements, arrangements or commitments (contingent or otherwise) obligating AMVESCAP to issue or sell any shares or securities or obligations of any kind convertible into or exchangeable for any shares. All outstanding AMVESCAP Ordinary Shares have been duly authorized and are validly issued and outstanding as fully paid shares. There are no outstanding bonds, debentures or other evidences of indebtedness of AMVESCAP having the right to vote (or that are convertible for or exercisable into securities having the right to vote) with the holders of the AMVESCAP Ordinary Shares on any matter. Other than employee stock option plans, there are no outstanding contractual obligations of AMVESCAP to repurchase, redeem or otherwise acquire any of its outstanding Ordinary Shares. (c) Authority and No Violation. (i) AMVESCAP has the requisite corporate power and authority to enter into this Agreement, the Support Agreement and the Voting and Exchange Trust Agreement and (subject to the passing of the AMVESCAP Resolution and obtaining the Regulatory Approvals) to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement, the Support Agreement and the Voting 132 -2- and Exchange Trust Agreement by AMVESCAP and (subject to the passing of the AMVESCAP Resolution and obtaining the Regulatory Approvals) the consummation by AMVESCAP of the transactions contemplated by this Agreement, the Support Agreement and the Voting and Exchange Trust Agreement have been duly authorized by its respective Board of Directors and other than passing the AMVESCAP Resolution and obtaining the Regulatory Approvals, no other corporate proceedings on its part are necessary to authorize this Agreement, the Support Agreement and the Voting and Exchange Trust Agreement or the transactions contemplated hereby or thereby, other than: (A) with respect to the AMVESCAP Circular and other matters relating solely thereto, the approval of the Board of Directors of AMVESCAP; and (B) the approval of the AMVESCAP Shareholders. (ii) This Agreement has been duly executed and delivered by AMVESCAP and (subject to the passing of the AMVESCAP Resolution and obtaining the Regulatory Approvals) constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency and other applicable Laws affecting creditors' rights generally, and to general principles of equity. Each of the Support Agreement and the Voting and Exchange Trust Agreement will be duly executed and delivered by AMVESCAP and its subsidiaries who will be a party thereto and, (subject to the passing of the AMVESCAP Resolution and obtaining the Regulatory Approvals) when so executed and delivered, will constitute their legal, valid and binding obligation, enforceable against them in accordance with its terms, subject to bankruptcy, insolvency and other applicable Laws affecting creditors' rights generally, and to general principles of equity. (iii) The Board of Directors of AMVESCAP has (A) determined as of the date hereof that the Arrangement is in the best interests of AMVESCAP, and (B) determined as of the date hereof to recommend that the AMVESCAP Shareholders vote in favour of the matters in connection with the Arrangement to be considered at the AMVESCAP Meeting. AMVESCAP is not subject to a shareholder rights plan or "poison pill" or similar plan. (iv) The approval of this Agreement, the Support Agreement and the Voting and Exchange Trust Agreement, the execution and delivery by AMVESCAP and each of its subsidiaries who will be a party to this 133 -3- Agreement, the Support Agreement and the Voting and Exchange Trust Agreement and the performance by them of their obligations hereunder and thereunder and the completion of the Arrangement and the transactions contemplated thereby, will not (subject to the passing of the AMVESCAP Resolution and obtaining the Regulatory Approvals): (A) result in a violation or breach of, require any consent to be obtained under or give rise to any termination, purchase or sale rights or payment obligation under any provision of: (I) its certificate of incorporation, articles, by-laws or other charter documents; (II) any Laws, judgment or decree (subject to obtaining the Regulatory Approvals relating to AMVESCAP), except to the extent that the violation or breach of, or failure to obtain any consent under, any Laws, judgment or decree would not, individually or in the aggregate, have a Material Adverse Effect on AMVESCAP; or (III) except as would not, individually or in the aggregate, have a Material Adverse Effect on AMVESCAP, any contract, agreement, license, franchise or permit to which it is party or by which it or any AMVESCAP Material Subsidiary is bound or subject or is the beneficiary; (B) give rise to any right of termination or acceleration of indebtedness of AMVESCAP or any AMVESCAP Material Subsidiary, or cause any such indebtedness to come due before its stated maturity or cause any available credit of AMVESCAP or any AMVESCAP Material Subsidiary to cease to be available, other than as would not, individually or in the aggregate, have a Material Adverse Effect on AMVESCAP; or (C) except as would not, individually or in the aggregate, have a Material Adverse Effect on AMVESCAP, result in the imposition of any encumbrance, charge or lien upon any of its assets or the assets of any AMVESCAP Material Subsidiary, or restrict, hinder, impair or limit the ability of AMVESCAP or any AMVESCAP Material Subsidiary to carry on its business as and where it is now being carried on. No consent, approval, order or authorization of, or declaration or filing with, any Governmental Entity is required to be obtained by AMVESCAP in connection with the execution and delivery of this 134 -4- Agreement, the Support Agreement and the Voting and Exchange Trust Agreement or the consummation by any of AMVESCAP of the transactions contemplated hereby or thereby other than (A) the Regulatory Approvals relating to AMVESCAP, (B) any filings required in connection with the creation and issue of the AMVESCAP Special Voting Share, (C) the passing of the AMVESCAP Resolution by the AMVESCAP Shareholders, and (D) any other consents, approvals, orders, authorizations, declarations or filings of or with a Governmental Entity which have been set forth in writing by AMVESCAP to Trimark in a form acceptable to Trimark or which, if not obtained, would not, individually or in the aggregate, have a Material Adverse Effect on AMVESCAP. (d) Absence of Certain Changes or Events. Except as Publicly Disclosed by AMVESCAP, since December 31, 1999 through to the date hereof each of the AMVESCAP and each AMVESCAP Material Subsidiary has conducted its business only in the ordinary and regular course of business consistent with past practice and there has not occurred: (i) a Material Adverse Change with respect to AMVESCAP; (ii) any damage, destruction or loss not fully covered by insurance that could reasonably be expected to have a Material Adverse Effect on AMVESCAP; (iii) any entering into, amendment of, relinquishment, termination or non-renewal by it of any material contract, agreement, license, franchise, lease transaction, commitment or other right or obligation that could reasonably be expected to have a Material Adverse Effect on AMVESCAP; (iv) any resolution to approve a split, consolidation or reclassification of the AMVESCAP Ordinary Shares; or (v) any material change in its accounting methods, principles or practices. (e) Financial Statements. The audited consolidated financial statements for AMVESCAP as at and for each of the 12-month periods ended December 31, 1999, 1998 and 1997 have been prepared in accordance with United Kingdom generally accepted accounting principles and practices consistently applied and all applicable United Kingdom Financial Reporting Standards and Statements of Standard Accounting Practice and the United Kingdom Companies Act 1985 (as amended); such financial statements give a true and fair view of the consolidated financial position and results of operations of AMVESCAP and its subsidiaries as of the respective dates thereof and for the respective periods covered thereby. The unaudited consolidated financial 135 -5- statements of AMVESCAP for the 3 month period ended March 31, 2000 fairly present in all material respects the trading results and profits before taxation of AMVESCAP and its subsidiaries for such period and save for the fact that they are unaudited (and subject to the absence of notes and the usual year end adjustments), have been prepared in accordance with United Kingdom generally accepted accounting principles and practices consistently applied and all applicable United Kingdom Financial Reporting Standards and Statements of Standard Accounting Practice (to the extent normally complied with in respect of such interim statements by similar UK listed companies). (f) Reports. AMVESCAP has filed with applicable United Kingdom authorities true and complete copies of all material forms, reports, schedules, statements and other documents required to be filed by it since January 1, 2000, and such documents, at the time filed, (i) did not contain any misrepresentation (as defined in the Securities Act) and (ii) complied in all material respects with the requirements of applicable securities Laws. (g) Compliance with Laws. Except as has been set forth in writing by AMVESCAP to Trimark in a form acceptable to Trimark or Publicly Disclosed by AMVESCAP, AMVESCAP and the AMVESCAP Material Subsidiaries have complied with and are not in violation of any applicable Laws, orders, judgments and decrees other than non-compliance or violations which would not, individually or in the aggregate, have a Material Adverse Effect on AMVESCAP. (h) Litigation, Etc. Except as has been set forth in writing by AMVESCAP to Trimark in a form acceptable to Trimark or Publicly Disclosed by AMVESCAP, there is no claim, action, proceeding or investigation pending or, to the knowledge of AMVESCAP, threatened against AMVESCAP or any AMVESCAP Material Subsidiary before any court or Governmental Entity that would reasonably be expected to have a Material Adverse Effect on AMVESCAP or to prevent or materially delay consummation of the transactions contemplated by this Agreement or the Arrangement. Neither AMVESCAP nor any AMVESCAP Material Subsidiary, nor their respective assets and properties, is subject to any outstanding judgment, order, writ, injunction or decree that has had or is reasonably likely to have a Material Adverse Effect on AMVESCAP or that would prevent or materially delay consummation of the transactions contemplated by this Agreement or the Arrangement. (i) AMVESCAP Ordinary Shares. Subject to compliance with the requirements of the LSE and UKLA, and the passing of the AMVESCAP Resolution, the AMVESCAP Ordinary Shares to be issued at the Effective Date and upon the exchange, conversion or exercise from time to time of the Exchangeable 136 -6- Shares, and the Replacement Options, respectively, will, in all cases, be duly and validly issued by AMVESCAP on their respective dates of issue as fully paid shares and approved for listing (subject to allotment) by the UKLA. (j) Exchangeable Shares. Subject to Exchangeco complying with all applicable Laws, including the rules and regulations of the Toronto Stock Exchange, the Exchangeable Shares to be issued at the Effective Date and in accordance with the terms of the AMVESCAP Equity Subordinated Debentures will, in all cases, be duly and validly issued by Exchangeco on their respective dates of issue as fully paid and non-assessable shares, and, together with the AMVESCAP Equity Subordinated Debentures, will be conditionally approved for listing by the Toronto Stock Exchange. (k) Financing. AMVESCAP has made adequate arrangements to ensure that sufficient cash funds are and will at the Effective Time be available to pay to Trimark Securityholders all such cash amounts as will be payable at the Effective Time pursuant to the Arrangement. EX-4.24 13 h86436ex4-24.txt SUPPORT AGREEMENT 1 EXHIBIT 4.24 SUPPORT AGREEMENT MEMORANDUM OF AGREEMENT made as of the 1st day of August, 2000, between AMVESCAP PLC a corporation existing under the laws of England (hereinafter referred to as "AMVESCAP") and AVZ CALLCO INC., a company existing under the laws of Nova Scotia (hereinafter referred to as "CALLCO") and AMVESCAP INC., a corporation existing under the laws of Nova Scotia (hereinafter referred to as "EXCHANGECO"). RECITALS: (a) In connection with an amended and restated merger agreement (the "MERGER AGREEMENT") made as of May 9, 2000 among AMVESCAP and Trimark Financial Corporation ("TRIMARK"), Exchangeco is to issue exchangeable shares (the "EXCHANGEABLE SHARES") to certain holders of securities of Trimark pursuant to the plan of arrangement contemplated by the Merger Agreement; (b) In connection with an indenture (the "INDENTURE") made as of the date hereof among AMVESCAP, Exchangeco and CIBC Mellon Trust Company, Exchangeco may issue Exchangeable Shares to holders of 6% equity subordinated debentures of Exchangeco (the "DEBENTURES") which may be issued to certain holders of securities of Trimark pursuant to the plan of arrangement contemplated by the Merger Agreement; and (c) Pursuant to the Merger Agreement, AMVESCAP, Callco and Exchangeco are required to execute a support agreement substantially in the form of this agreement. In consideration of the foregoing and the mutual agreements contained herein (the receipt and adequacy of which are acknowledged), the parties agree as follows: ARTICLE 1 DEFINITIONS AND INTERPRETATION SECTION 1.1 DEFINED TERMS Each term denoted herein by initial capital letters and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions (collectively, the "SHARE PROVISIONS") attaching to the Exchangeable Shares as set out in the articles of Exchangeco, unless the context requires otherwise. 2 - 2 - SECTION 1.2 INTERPRETATION NOT AFFECTED BY HEADINGS The division of this agreement into Articles, sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this agreement. Unless otherwise indicated, all references to an "ARTICLE" or "SECTION" followed by a number and/or a letter refer to the specified Article or Section of this agreement. The terms "THIS AGREEMENT", "HEREOF", "HEREIN" and "HEREUNDER" and similar expressions refer to this agreement and not to any particular Article, section or other portion hereof and include any agreement or instrument supplementary or ancillary hereto. SECTION 1.3 NUMBER, GENDER Words importing the singular number only shall include the plural and vice versa. Words importing any gender shall include all genders. SECTION 1.4 DATE FOR ANY ACTION If any date on which any action is required to be taken under this agreement is not a Business Day, such action shall be required to be taken on the next succeeding Business Day. For the purposes of this agreement, a "BUSINESS DAY" means any day on which commercial banks are open for business in Toronto, Ontario and London, England, other than a Saturday, a Sunday or a day observed as a holiday in Toronto, Ontario or London, England under applicable laws. ARTICLE 2 COVENANTS OF AMVESCAP AND EXCHANGECO SECTION 2.1 COVENANTS REGARDING EXCHANGEABLE SHARES So long as any Exchangeable Shares not owned by AMVESCAP or its Affiliates are outstanding, AMVESCAP will: (a) not declare or pay any dividend on the AMVESCAP Ordinary Shares unless (i) Exchangeco shall on the same day declare or pay, as the case may be, an equivalent dividend (as provided for in the Share Provisions) on the Exchangeable Shares (an "EQUIVALENT DIVIDEND") and (ii) Exchangeco shall have sufficient money or other assets or authorized but unissued securities available to enable the due declaration and the due and punctual payment, in accordance with applicable law, of any such Equivalent Dividend or (iii) Exchangeco shall (y) subdivide the Exchangeable Shares in lieu of stock dividend thereon (as provided for in the Share Provisions) (an "EQUIVALENT STOCK SUBDIVISION"), and (z) have sufficient authorized but unissued securities available to enable the Equivalent Stock Subdivision; 3 - 3 - (b) advise Exchangeco sufficiently in advance of the declaration by AMVESCAP of any dividend on AMVESCAP Ordinary Shares and take all such other actions as are reasonably necessary, in co-operation with Exchangeco, to ensure that (i) the respective declaration date, record date and payment date for an Equivalent Dividend on the Exchangeable Shares shall be the same as the declaration date, record date and payment date for the corresponding dividend on the AMVESCAP Ordinary Shares, or (ii) the record date and effective date for an Equivalent Stock Subdivision shall be the same as the record date and payment date for the corresponding stock dividend on the AMVESCAP Ordinary Shares; (c) ensure that the record date for any dividend declared on AMVESCAP Ordinary Shares is not less than 10 Business Days after the declaration date of such dividend; (d) take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Exchangeco, in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Liquidation Amount, the Retraction Price or the Redemption Price in respect of each issued and outstanding Exchangeable Share (other than Exchangeable Shares owned by AMVESCAP or its Affiliates) upon the liquidation, dissolution or winding-up of Exchangeco or any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding up its affairs, the delivery of a Retraction Request by a holder of Exchangeable Shares or a redemption of Exchangeable Shares by Exchangeco, as the case may be, including without limitation all such actions and all such things as are necessary or desirable to enable and permit Exchangeco to cause to be delivered AMVESCAP Ordinary Shares to the holders of Exchangeable Shares in accordance with the provisions of Section 5, 6 or 7, as the case may be, of the Share Provisions; (e) take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Callco, in accordance with applicable law, to perform its obligations arising upon the exercise by it of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, including without limitation all such actions and all such things as are necessary or desirable to enable and permit Callco to cause to be delivered AMVESCAP Ordinary Shares to the holders of Exchangeable Shares in accordance with the provisions of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, as the case may be; and 4 - 4 - (f) not exercise its vote as a shareholder to initiate the voluntary liquidation, dissolution or winding up of Exchangeco or any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding up its affairs, nor take any action or omit to take any action that is designed to result in the liquidation, dissolution or winding up of Exchangeco or any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding up its affairs. SECTION 2.2 SEGREGATION OF FUNDS AMVESCAP will cause Exchangeco to deposit a sufficient amount of funds in a separate account of Exchangeco and segregate a sufficient amount of such other assets and property as is necessary to enable Exchangeco to pay dividends when due and to pay or otherwise satisfy its respective obligations under Sections 5, 6 and 7 of the Share Provisions, as applicable. SECTION 2.3 RESERVATION OF AMVESCAP ORDINARY SHARES AMVESCAP hereby represents, warrants and covenants in favour of Exchangeco and Callco that AMVESCAP has reserved for issuance and will, at all times while any Exchangeable Shares or Debentures (other than Exchangeable Shares or Debentures held by AMVESCAP or its Affiliates) are outstanding, keep available, free from pre-emptive and other rights, out of its authorized and unissued capital stock such number of AMVESCAP Ordinary Shares (or other shares or securities into which AMVESCAP Ordinary Shares may be reclassified or changed as contemplated by Section 2.7): (a) as is equal to the sum of (i) the number of Exchangeable Shares issued and outstanding from time to time and (ii) the number of Exchangeable Shares issuable upon the exercise of all rights to acquire Exchangeable Shares outstanding from time to time, including such rights under the terms of the Indenture; and (b) as are now and may hereafter be required to enable and permit AMVESCAP to meet its obligations under the Voting and Exchange Trust Agreement and under any other security or commitment pursuant to which AMVESCAP may now or hereafter be required to issue AMVESCAP Ordinary Shares, to enable and permit Callco to meet its obligations under each of the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right and to enable and permit Exchangeco to meet its obligations hereunder and under the Share Provisions. SECTION 2.4 NOTIFICATION OF CERTAIN EVENTS In order to assist AMVESCAP to comply with its obligations hereunder and to permit Callco to exercise the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right, Exchangeco will notify AMVESCAP and Callco of each of the following events at the time set forth below: 5 - 5 - (a) in the event of any determination by the Board of Directors of Exchangeco to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Exchangeco or to effect any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; (b) promptly, upon the earlier of receipt by Exchangeco of notice of and Exchangeco otherwise becoming aware of any threatened or instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of Exchangeco or to effect any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding up its affairs; (c) immediately, upon receipt by Exchangeco of a Retraction Request; (d) on the same date on which notice of redemption is given to holders of Exchangeable Shares, upon the determination of a Redemption Date in accordance with the Share Provisions; and (e) as soon as practicable upon the issuance by Exchangeco of any Exchangeable Shares or rights to acquire Exchangeable Shares (other than the issuance of Exchangeable Shares and rights to acquire Exchangeable Shares in exchange for Trimark Common Shares pursuant to the Arrangement). SECTION 2.5 DELIVERY OF AMVESCAP ORDINARY SHARES TO EXCHANGECO AND CALLCO In furtherance of its obligations under Section 2.1(d) and Section 2.1(e), upon notice from Exchangeco or Callco of any event that requires Exchangeco or Callco to cause to be delivered AMVESCAP Ordinary Shares to any holder of Exchangeable Shares, AMVESCAP shall forthwith allot, issue and deliver or cause to be delivered to the relevant holder of Exchangeable Shares as directed by Exchangeco or Callco the requisite number of AMVESCAP Ordinary Shares to be allotted to, received by, and issued to or to the order of, the former holder of the surrendered Exchangeable Shares (but, for the avoidance of doubt, not to Exchangeco or Callco). All such AMVESCAP Ordinary Shares shall be duly authorized and validly issued as fully paid and shall be free and clear of any lien, claim or encumbrance. In consideration of the issuance and delivery of each such AMVESCAP Ordinary Share, Exchangeco or Callco, as the case may be, shall subscribe a cash amount or pay a purchase price equal to the fair market value of such AMVESCAP Ordinary Shares. 6 - 6 - SECTION 2.6 QUALIFICATION OF AMVESCAP ORDINARY SHARES If any AMVESCAP Ordinary Shares (or other shares or securities into which AMVESCAP Ordinary Shares may be reclassified or changed as contemplated by Section 2.7) to be issued and delivered hereunder require registration or qualification with or approval of or the filing of any document, including any prospectus or similar document or the taking of any proceeding with or the obtaining of any order, ruling or consent from any governmental or regulatory authority under any United Kingdom or Canadian federal, provincial or territorial securities or other law or regulation or pursuant to the rules and regulations of any securities or other regulatory authority in the United Kingdom or Canada or the fulfillment of any other United Kingdom or Canadian legal requirement before such shares (or such other shares or securities) may be issued by AMVESCAP and delivered by AMVESCAP at the direction of Callco or Exchangeco, if applicable, to the holder of surrendered Exchangeable Shares or in order that such shares (or such other shares or securities) may be freely traded thereafter (other than any restrictions of general application on transfer by reason of a holder being a "control person" for purposes of Canadian federal, provincial or territorial securities law or the equivalent thereof under any United Kingdom laws, rules, regulations or stock exchange requirements), AMVESCAP will in good faith expeditiously take all such actions and do all such things as are reasonably necessary or desirable to cause such AMVESCAP Ordinary Shares (or such other shares or securities) to be and remain duly registered, qualified or approved under United Kingdom and/or Canadian law. AMVESCAP will in good faith expeditiously take all such actions and do all such things as are reasonably necessary or desirable to cause all AMVESCAP Ordinary Shares (or such other shares or securities) to be delivered hereunder to be listed, quoted or posted for trading on all stock exchanges and quotation systems on which outstanding AMVESCAP Ordinary Shares (or such other shares or securities) have been listed by AMVESCAP and remain listed and are quoted or posted for trading at such time, including, if required by the LSE or UKLA, by preparing, filing and seeking approval for listing particulars for AMVESCAP Ordinary Shares when Exchangeable Shares representing in excess of 9.9% of the then outstanding AMVESCAP Ordinary Shares have been exchanged for AMVESCAP Ordinary Shares, and thereafter, if required by the LSE or UKLA, on each occasion when, during the period following the then most recent UKLA approval for listing of AMVESCAP Ordinary Shares in respect of Exchangeable Shares, additional Exchangeable Shares representing in excess of 9.9% of the then outstanding AMVESCAP Ordinary Shares have been exchanged for AMVESCAP Ordinary Shares. SECTION 2.7 ECONOMIC EQUIVALENCE So long as any Exchangeable Shares not owned by AMVESCAP or its Affiliates are outstanding: 7 - 7 - (a) AMVESCAP will not without prior approval of Exchangeco and the prior approval of the holders of the Exchangeable Shares given in accordance with section 10(2) of the Share Provisions: (i) issue or distribute AMVESCAP Ordinary Shares (or securities exchangeable for or convertible into or carrying rights to acquire AMVESCAP Ordinary Shares) to the holders of all or substantially all of the then outstanding AMVESCAP Ordinary Shares by way of stock dividend or other distribution, other than an issue of AMVESCAP Ordinary Shares (or securities exchangeable for or convertible into or carrying rights to acquire AMVESCAP Ordinary Shares) to holders of AMVESCAP Ordinary Shares (i) who exercise an option to receive dividends in AMVESCAP Ordinary Shares (or securities exchangeable for or convertible into or carrying rights to acquire AMVESCAP Ordinary Shares) in lieu of receiving cash dividends, or (ii) pursuant to any dividend reinvestment plan or scrip dividend; or (ii) issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding AMVESCAP Ordinary Shares entitling them to subscribe for or to purchase AMVESCAP Ordinary Shares (or securities exchangeable for or convertible into or carrying rights to acquire AMVESCAP Ordinary Shares); or (iii) issue or distribute to the holders of all or substantially all of the then outstanding AMVESCAP Ordinary Shares (A) shares or securities of AMVESCAP of any class other than AMVESCAP Ordinary Shares (other than shares convertible into or exchangeable for or carrying rights to acquire AMVESCAP Ordinary Shares), (B) rights, options or warrants other than those referred to in Section 2.7(a)(ii), (C) evidences of indebtedness of AMVESCAP or (D) assets of AMVESCAP; unless in each case the economic equivalent on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets is issued or distributed simultaneously to holders of the Exchangeable Shares; provided that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed by AMVESCAP in order to give effect to and to consummate the transactions contemplated by, and in accordance with, the Merger Agreement. 8 - 8 - (b) AMVESCAP will not without the prior approval of Exchangeco and the prior approval of the holders of the Exchangeable Shares given in accordance with section 10(2) of the Share Provisions: (i) subdivide, redivide or change the then outstanding AMVESCAP Ordinary Shares into a greater number of AMVESCAP Ordinary Shares; or (ii) reduce, combine, consolidate or change the then outstanding AMVESCAP Ordinary Shares into a lesser number of AMVESCAP Ordinary Shares; or (iii) reclassify or otherwise change AMVESCAP Ordinary Shares or effect an amalgamation, merger, reorganization or other transaction affecting AMVESCAP Ordinary Shares; unless the same or an economically equivalent change shall simultaneously be made to, or in the rights of the holders of, the Exchangeable Shares. (c) AMVESCAP will ensure that the record date for any event referred to in Section 2.7(a) or Section 2.7(b), or (if no record date is applicable for such event) the effective date for any such event, is not less than five Business Days after the date on which such event is declared or announced by AMVESCAP (with contemporaneous notification thereof by AMVESCAP to Exchangeco). (d) The Board of Directors of Exchangeco shall determine, in good faith and in its sole discretion, economic equivalence for the purposes of any event referred to in Section 2.7(a) or Section 2.7(b) and each such determination shall be conclusive and binding on AMVESCAP. In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors of Exchangeco to be relevant, be considered by the Board of Directors of Exchangeco: (i) in the case of any stock dividend or other distribution payable in AMVESCAP Ordinary Shares, the number of such shares issued in proportion to the number of AMVESCAP Ordinary Shares previously outstanding; (ii) in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase AMVESCAP Ordinary Shares (or securities exchangeable for or convertible into or carrying rights to acquire AMVESCAP Ordinary Shares), the 9 - 9 - relationship between the exercise price of each such right, option or warrant and the Current Market Price of an AMVESCAP Ordinary Share; (iii) in the case of the issuance or distribution of any other form of property (including without limitation any shares or securities of AMVESCAP of any class other than AMVESCAP Ordinary Shares, any rights, options or warrants other than those referred to in Section 2.7(d)(ii), any evidences of indebtedness of AMVESCAP or any assets of AMVESCAP), the relationship between the fair market value (as determined by the Board of Directors of Exchangeco in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding AMVESCAP Ordinary Share and the Current Market Price of an AMVESCAP Ordinary Share; (iv) in the case of any subdivision, redivision or change of the then outstanding AMVESCAP Ordinary Shares into a greater number of AMVESCAP Ordinary Shares or the reduction, combination, consolidation or change of the then outstanding AMVESCAP Ordinary Shares into a lesser number of AMVESCAP Ordinary Shares or any amalgamation, merger, reorganization or other transaction affecting AMVESCAP Ordinary Shares, the effect thereof upon the then outstanding AMVESCAP Ordinary Shares; and (v) in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of AMVESCAP Ordinary Shares as a result of differences between taxation laws of Canada and the United Kingdom (except for any differing consequences arising as a result of differing marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares). (e) Exchangeco agrees that, to the extent required, upon due notice from AMVESCAP, Exchangeco will use its best efforts to take or cause to be taken such steps as may be necessary for the purposes of ensuring that appropriate dividends are paid or other distributions are made by Exchangeco, or subdivisions, redivisions or changes are made to the Exchangeable Shares, in order to implement the required economic equivalence with respect to the AMVESCAP Ordinary Shares and Exchangeable Shares as provided for in this Section 2.7. 10 - 10 - SECTION 2.8 TENDER OFFERS In the event that a tender offer, share exchange offer, issuer bid, take-over bid or similar transaction with respect to AMVESCAP Ordinary Shares (an "OFFER") is proposed by AMVESCAP or is proposed to AMVESCAP or its shareholders and is recommended by the Board of Directors of AMVESCAP, or is otherwise effected or to be effected with the consent or approval of the Board of Directors of AMVESCAP, and the Exchangeable Shares are not redeemed by Exchangeco or purchased by Callco pursuant to the Redemption Call Right, AMVESCAP will expeditiously and in good faith to take all such actions and do all such things as are reasonably necessary or desirable to enable and permit holders of Exchangeable Shares (other than AMVESCAP and its Affiliates) to participate in such Offer to the same extent and on an economically equivalent basis as the holders of AMVESCAP Ordinary Shares, without discrimination. Without limiting the generality of the foregoing, AMVESCAP will expeditiously and in good faith take all such actions and do all such things as are reasonably necessary or desirable to ensure that holders of Exchangeable Shares may participate in each such Offer without being required to retract Exchangeable Shares as against Exchangeco (or, if so required, to ensure that any such retraction, shall be effective only upon, and shall be conditional upon, the closing of such Offer and only to the extent necessary to tender or deposit to the Offer). Nothing herein shall affect the rights of Exchangeco to redeem (or Callco to purchase pursuant to the Redemption Call Right) Exchangeable Shares, as applicable, in the event of an AMVESCAP Control Transaction. SECTION 2.9 OWNERSHIP OF OUTSTANDING SHARES Without the prior approval of Exchangeco and the prior approval of the holders of the Exchangeable Shares given in accordance with section 10(2) of the Share Provisions, AMVESCAP covenants and agrees in favour of Exchangeco that, as long as any outstanding Exchangeable Shares or Debentures are owned by any Person other than AMVESCAP or any of its Affiliates, AMVESCAP will be and remain the direct or indirect beneficial owner of all issued and outstanding voting shares in the capital of Exchangeco and Callco. SECTION 2.10 AMVESCAP AND AFFILIATES NOT TO VOTE EXCHANGEABLE SHARES AMVESCAP covenants and agrees that it will appoint and cause to be appointed proxyholders with respect to all Exchangeable Shares held by it and its Affiliates for the sole purpose of attending each meeting of holders of Exchangeable Shares in order to be counted as part of the quorum for each such meeting. AMVESCAP further covenants and agrees that it will not, and will cause its Affiliates not to, exercise any voting rights which may be exercisable by holders of Exchangeable Shares from time to time pursuant to the Share Provisions or pursuant to the provisions of the OBCA (or any successor or other corporate statute by which Exchangeco may in the future be governed) with respect to any Exchangeable Shares 11 - 11 - held by it or by its Affiliates in respect of any matter considered at any meeting of holders of Exchangeable Shares. SECTION 2.11 ORDINARY MARKET PURCHASES For certainty, nothing contained in this agreement, including without limitation the obligations of AMVESCAP contained in Section 2.8, shall limit the ability of AMVESCAP (or any of its subsidiaries including, without limitation, Callco or Exchangeco) to make ordinary market purchases of AMVESCAP Ordinary Shares in accordance with applicable laws and regulatory or stock exchange requirements. SECTION 2.12 STOCK EXCHANGE LISTING AMVESCAP covenants and agrees in favour of Exchangeco that, as long as any outstanding Exchangeable Shares are owned by any Person other than AMVESCAP or any of its Affiliates, AMVESCAP will use its best efforts to maintain a listing for such Exchangeable Shares on the Toronto Stock Exchange. ARTICLE 3 AMVESCAP SUCCESSORS SECTION 3.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. As long as any outstanding Exchangeable Shares are owned by any Person other than AMVESCAP or any of its Affiliates, AMVESCAP shall not consummate any transaction (whether by way of reconstruction, reorganization, consolidation, arrangement, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other Person or, in the case of a merger, of the continuing corporation resulting therefrom unless, but may do so if: (a) such other Person or continuing corporation (the "AMVESCAP SUCCESSOR") by operation of law, becomes, without more, bound by the terms and provisions of this agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, an agreement supplemental hereto and such other instruments (if any) as are reasonably necessary or advisable to evidence the assumption by the AMVESCAP Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such AMVESCAP Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of AMVESCAP under this agreement; and (b) such transaction shall be upon such terms and conditions as substantially to preserve and not to impair in any material respect any 12 - 12 - of the rights, duties, powers and authorities of the other parties hereunder or the holders of the Exchangeable Shares. SECTION 3.2 VESTING OF POWERS IN SUCCESSOR Whenever the conditions of Section 3.1 have been duly observed and performed, the parties, if required by Section 3.1, shall execute and deliver the supplemental agreement provided for in Section 3.1(a) and thereupon the AMVESCAP Successor shall possess and from time to time may exercise each and every right and power of AMVESCAP under this agreement in the name of AMVESCAP or otherwise and any act or proceeding by any provision of this agreement required to be done or performed by the Board of Directors of AMVESCAP or any officers of AMVESCAP may be done and performed with like force and effect by the directors or officers of such AMVESCAP Successor. SECTION 3.3 WHOLLY-OWNED SUBSIDIARIES Nothing herein shall be construed as preventing (i) the amalgamation or merger of any wholly-owned direct or indirect subsidiary of AMVESCAP with or into AMVESCAP, (ii) the winding-up, liquidation or dissolution of any wholly-owned direct or indirect subsidiary of AMVESCAP, provided that all of the assets of such subsidiary are transferred to AMVESCAP or another wholly-owned direct or indirect subsidiary of AMVESCAP, or (iii) any other distribution of the assets of any wholly-owned direct or indirect subsidiary of AMVESCAP among the shareholders of such subsidiary for the purpose of winding up its affairs, and any such transactions are expressly permitted by this Article 3. ARTICLE 4 GENERAL SECTION 4.1 TERM This agreement shall come into force and be effective as of the date hereof and shall terminate and be of no further force and effect at such time as no Exchangeable Shares (or securities or rights convertible into or exchangeable for or carrying rights to acquire Exchangeable Shares, including the Debentures) are held by any Person other than AMVESCAP and any of its Affiliates. SECTION 4.2 CHANGES IN CAPITAL OF AMVESCAP AND EXCHANGECO At all times after the occurrence of any event contemplated pursuant to Section 2.7 and Section 2.8 or otherwise, as a result of which either AMVESCAP Ordinary Shares or the Exchangeable Shares or both are in any way changed, this agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis, to all new securities into which AMVESCAP Ordinary Shares or the Exchangeable Shares or both are so 13 - 13 - changed and the parties hereto shall execute and deliver an agreement in writing giving effect to and evidencing such necessary amendments and modifications. SECTION 4.3 SEVERABILITY If any term or other provision of this agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. SECTION 4.4 AMENDMENTS, MODIFICATIONS (1) Subject to Sections 4.2, 4.3 and 4.5, this agreement may not be amended or modified except by an agreement in writing executed by Exchangeco, Callco and AMVESCAP and approved by the holders of the Exchangeable Shares in accordance with section 10(2) of the Share Provisions. (2) No amendment or modification or waiver of any of the provisions of this agreement otherwise permitted hereunder shall be effective unless made in writing and signed by all of the parties hereto. SECTION 4.5 MINISTERIAL AMENDMENTS Notwithstanding the provisions of Section 4.4, the parties to this agreement may in writing at any time and from time to time, without the approval of the holders of the Exchangeable Shares, amend or modify this agreement for the purposes of: (a) adding to the covenants of any or all parties provided that the Board of Directors of each of Exchangeco, Callco and AMVESCAP shall be of the good faith opinion that such additions will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares; (b) making such amendments or modifications not inconsistent with this agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the Board of Directors of each of Exchangeco, Callco and AMVESCAP, it may be expedient to make, provided that each such Board of Directors shall be of the good faith opinion that such amendments or modifications will not be 14 - 14 - prejudicial to the rights or interests of the holders of the Exchangeable Shares; or (c) making such changes or corrections which, on the advice of counsel to Exchangeco, Callco and AMVESCAP, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that the Boards of Directors of each of Exchangeco, Callco and AMVESCAP shall be of the good faith opinion that such changes or corrections will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares. SECTION 4.6 MEETING TO CONSIDER AMENDMENTS Exchangeco, at the request of AMVESCAP, shall call a meeting or meetings of the holders of the Exchangeable Shares for the purpose of considering any proposed amendment or modification requiring approval pursuant to Section 4.4. Any such meeting or meetings shall be called and held in accordance with the bylaws of Exchangeco, the Share Provisions and all applicable laws. SECTION 4.7 ENUREMENT This agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns. SECTION 4.8 NOTICES TO PARTIES (1) All notices and other communications between the parties to this agreement shall be in writing and shall be deemed to have been given if delivered personally or by confirmed telecopy to the parties at the following addresses (or at such other address for any such party as shall be specified in like notice): c/o AMVESCAP PLC 11 Devonshire Square London, England EC2M 4Y2 Attention: Corporate Secretary Telecopier No.: 011-44-207-929-5889 with a copy (which shall not constitute notice) to: Stikeman Elliott 5300 Commerce Court West 199 Bay Street Toronto, Ontario M5L 1B9 Attention: Mr. John M. Stransman Telecopier No.: (416) 947-0866 15 - 15 - (2) Any notice or other communication given personally shall be deemed to have been given and received upon delivery thereof and if given by telecopy shall be deemed to have been given and received on the date of confirmed receipt thereof unless such day is not a Business Day, in which case it shall be deemed to have been given and received upon the immediately following Business Day. SECTION 4.9 COUNTERPARTS This agreement may be executed in counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. SECTION 4.10 JURISDICTION This agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. SECTION 4.11 ATTORNMENT Each of the parties hereto agrees that any action or proceeding arising out of or relating to this agreement may be instituted in the courts of Ontario, waives any objection which it may have now or hereafter to the venue of any such action or proceeding, irrevocably submits to the jurisdiction of the said courts in any such action or proceeding, agrees to be bound by any judgment of the said courts and not to seek, and hereby waives, any review of the merits of any such judgment by the courts of any other jurisdiction, and AMVESCAP hereby appoints Exchangeco at its registered office in the Province of Ontario as attorney for service of process. IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly executed as of the date first above written. AMVESCAP PLC By: /s/ ROBERT F. MCCULLOUGH ------------------------------------ Authorized Signing Officer AVZ CALLCO INC. By: /s/ [ILLEGIBLE] ------------------------------------ Authorized Signing Officer AMVESCAP INC. By: /S/ [ILLEGIBLE] ------------------------------------ Authorized Signing Officer EX-4.25 14 h86436ex4-25.txt VOTING AND EXCHANGE TRUST AGREEMENT 1 EXHIBIT 4.25 VOTING AND EXCHANGE TRUST AGREEMENT MEMORANDUM OF AGREEMENT made as of the 1st day of August, 2000, between AMVESCAP PLC, a corporation existing under the laws of England (hereinafter referred to as "AMVESCAP"), and AMVESCAP INC., a corporation existing under the laws of Nova Scotia (hereinafter referred to as "EXCHANGECO") and CIBC MELLON TRUST COMPANY, a trust company incorporated under the laws of Canada (hereinafter referred to as "TRUSTEE"). RECITALS: (a) In connection with an amended and restated merger agreement (as further amended, supplemented and/or restated, the "MERGER AGREEMENT") made as of May 9, 2000 between AMVESCAP and Trimark Financial Corporation ("Trimark"), Exchangeco is to issue exchangeable shares to certain holders of securities of Trimark pursuant to the plan of arrangement contemplated in the Merger Agreement; (b) In connection with an indenture (the "INDENTURE") made as of the date hereof among AMVESCAP, Exchangeco and CIBC Mellon Trust Company, Exchangeco may issue Exchangeable Shares to holders of 6% equity subordinated debentures of Exchangeco which may be issued to certain holders of securities of Trimark pursuant to the plan of arrangement contemplated by the Merger Agreement; and (c) Pursuant to the Merger Agreement, AMVESCAP and Exchangeco are required to execute a voting and exchange trust agreement substantially in the form of this Agreement. In consideration of the foregoing and the mutual agreements contained herein (the receipt and adequacy of which are acknowledged), the parties agree as follows: ARTICLE 1 DEFINITIONS AND INTERPRETATION SECTION 1.1 DEFINITIONS In this Agreement, the following terms shall have the following meanings: "AFFILIATE" has the meaning ascribed thereto in the Securities Act (Ontario), as amended. "AMVESCAP MEETING" has the meaning ascribed thereto in Section 4.2. 2 -2- "AMVESCAP ORDINARY SHARE" means an ordinary share in the capital of AMVESCAP. "AMVESCAP SPECIAL VOTING SHARE" means the special voting share in the capital of AMVESCAP which entitles the holder of record to a number of votes at meetings of holders of AMVESCAP Ordinary Shares equal to the number of Exchangeable Shares outstanding from time to time (other than Exchangeable Shares held by AMVESCAP and Affiliates of AMVESCAP), which share is to be issued to and voted by, the Trustee as described herein. "AMVESCAP SUCCESSOR" has the meaning ascribed thereto in Section 12.1(a). "ARRANGEMENT" means the arrangement under section 182 of the OBCA on the terms and subject to the conditions set out in the Plan of Arrangement. "AUTHORIZED INVESTMENTS" means short term interest bearing or discount debt obligations issued or guaranteed by the Government of Canada or any province thereof or a Canadian chartered bank (which may include an Affiliate or related party of the Trustee), maturing not more than one year from the date of investment, provided that each such obligation is rated at least R1 (middle) by DBRS Inc. or any equivalent rating by Canadian Bond Rating Service. "AUTOMATIC EXCHANGE RIGHT" means the benefit of the obligation of AMVESCAP under Section 5.1 pursuant to which AMVESCAP is required to purchase all or any part of the Exchangeable Shares from the holders thereof in exchange for AMVESCAP Ordinary Shares upon the occurrence and during the continuance of an Insolvency Event. "AUTOMATIC EXCHANGE RIGHTS ON LIQUIDATION" means the benefit of the obligation of AMVESCAP to effect the automatic exchange of Exchangeable Shares for AMVESCAP Ordinary Shares pursuant to Section 5.9. "BENEFICIARIES" means the registered holders from time to time of Exchangeable Shares, other than AMVESCAP and AMVESCAP's Affiliates, provided that a Debentureholder that becomes a registered holder of Exchangeable Shares pursuant to the terms of the Indenture shall only become a Beneficiary upon surrender of the Certificate of Entitlement together with the Debenture (for which such Debentureholder will receive such Exchangeable Shares) to which it is attached. "BENEFICIARY VOTES" has the meaning ascribed thereto in Section 4.2. "BOARD OF DIRECTORS" means the Board of Directors of Exchangeco. 3 -3- "BUSINESS DAY" means any day on which commercial banks are open for business in Toronto, Ontario and London, England, other than a Saturday, a Sunday or a day observed as a holiday in Toronto, Ontario or London, England under applicable laws. "CALLCO" means AVZ Callco Inc., a company existing under the laws of Nova Scotia, which is a wholly-owned subsidiary of AMVESCAP. "CANADIAN DOLLAR EQUIVALENT" means, in respect of an amount expressed in a currency other than Canadian dollars (the "FOREIGN CURRENCY AMOUNT") at any date, the product obtained by multiplying (a) the Foreign Currency Amount by (b) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such exchange rate on such date for such foreign currency expressed in Canadian dollars as may be determined by the Board of Directors in good faith and in its sole discretion to be appropriate for such purpose. "CERTIFICATE OF ENTITLEMENT" means the certificate in the form attached hereto as Schedule "A" evidencing Rights of Entitlement issued to Debentureholders in accordance with the terms of this Agreement concurrently with the issuance of Debentures. "CURRENT MARKET PRICE" means, in respect of an AMVESCAP Ordinary Share on any date, the quotient obtained by dividing (a) the aggregate of the Daily Value of Trades for each day during a period of 20 consecutive trading days ending not more than three trading days before such date, by (b) the aggregate volume of AMVESCAP Ordinary Shares used to calculate such Daily Value of Trades. "DAILY VALUE OF TRADES" means, in respect of the AMVESCAP Ordinary Shares on any trading day, the Canadian Dollar Equivalent of the product of (a) the volume weighted average price of AMVESCAP Ordinary Shares on the LSE (or, if the AMVESCAP Ordinary Shares are not then listed on the LSE, on such other stock exchange or automated quotation system on which the AMVESCAP Ordinary Shares are listed or quoted, as the case may be, as may be selected by the board of directors of AMVESCAP for such purpose) on such date, as determined by Bloomberg L.P. or another reputable, third party information source selected by the board of directors of AMVESCAP; and (b) the aggregate volume of AMVESCAP Ordinary Shares traded on such day on the LSE or such other stock exchange or automated quotation system and used to calculate such volume weighted average price; provided that any such selections by the board of directors of AMVESCAP shall be conclusive and binding. 4 -4- "DEBENTUREHOLDER" has the meaning ascribed thereto in the Indenture. "DEBENTURES" has the meaning ascribed thereto in the Indenture. "EXCHANGEABLE SHARES" means the non-voting exchangeable shares in the capital of Exchangeco, having substantially the rights, privileges, restrictions and conditions set out in Appendix I to the Plan of Arrangement. "INDEMNIFIED PARTIES" has the meaning ascribed thereto in Section 10.1. "INSOLVENCY EVENT" means (i) the institution by Exchangeco of any proceeding to be adjudicated a bankrupt or insolvent or to be wound up, or the consent of Exchangeco to the institution of bankruptcy, insolvency or winding-up proceedings against it, or (ii) the filing of a petition, answer or consent seeking dissolution or winding-up under any bankruptcy, insolvency or analogous laws, including without limitation the Companies Creditors' Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada), and the failure by Exchangeco to contest in good faith any such proceedings commenced in respect of Exchangeco within 30 days of becoming aware thereof, or the consent by Exchangeco to the filing of any such petition or to the appointment of a receiver, or (iii) the making by Exchangeco of a general assignment for the benefit of creditors, or the admission in writing by Exchangeco of its inability to pay its debts generally as they become due, or (iv) Exchangeco not being permitted, pursuant to solvency requirements of applicable law, to redeem any Retracted Shares pursuant to section 6(6) of the Share Provisions. "LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in the Plan of Arrangement. "LIQUIDATION EVENT" has the meaning ascribed thereto in Section 5.9(2). "LIQUIDATION EVENT EFFECTIVE DATE" has the meaning ascribed thereto in Section 5.9(3). "LIST" has the meaning ascribed thereto in Section 4.6. "LSE" means the London Stock Exchange plc or its successors. "OBCA" means the Business Corporations Act (Ontario), as amended. "OFFICER'S CERTIFICATE" means, with respect to AMVESCAP or Exchangeco, as the case may be, a certificate signed by any officer or director of AMVESCAP or Exchangeco, as the case may be. 5 -5- "PERSON" includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, government body, syndicate or other entity, whether or not having legal status. "PLAN OF ARRANGEMENT" means the plan of arrangement in the form and content of Schedule B to the Merger Agreement and any amendments or variations thereto made in accordance with section 6.1 of the Merger Agreement or Article 6 of the Plan of Arrangement or made at the direction of the Court. "REDEMPTION CALL RIGHT" has the meaning ascribed thereto in the Plan of Arrangement. "RETRACTED SHARES" has the meaning ascribed thereto in Section 6(1)(a) of the Share Provisions. "RETRACTION CALL RIGHT" has the meaning ascribed thereto in the Share Provisions. "RIGHTS OF ENTITLEMENT" mean the right of a Debentureholder, at the time such Debentureholder becomes a registered holder of Exchangeable Shares as a result of: (a) the exercise by Exchangeco of its share redemption right pursuant to section 3.6 of the Indenture or its share repayment right pursuant to section 4.3 of the Indenture, (b) the conversion of Debentures by such Debentureholder pursuant to article 4 of the Indenture, or (c) such other event that results in such Debentureholder receiving Exchangeable Shares in return for its Debentures under the terms of the Indenture, to become a Beneficiary under this Agreement, for no additional consideration, upon surrender to the trustee under the Indenture of the Certificate of Entitlement together with the Debenture (for which such Debentureholder will receive such Exchangeable Shares) to which it is attached. "SHARE PROVISIONS" means the rights, privileges, restrictions and conditions attaching to the Exchangeable Shares. 6 -6- "STAMP TAXES" means all stamp, registration and transfer taxes and duties or their equivalents in all jurisdictions where such taxes and duties are payable as a result of any of the transactions contemplated by this Agreement including, without limitation, United Kingdom stamp duty and stamp duty reserve tax. "SUPPORT AGREEMENT" means that certain support agreement made as of even date herewith between Exchangeco, Callco and AMVESCAP in the form of Schedule D to the Merger Agreement, as amended in accordance with the terms of the Support Agreement. "TRUST" means the trust created by this Agreement. "TRUST ESTATE" means the AMVESCAP Special Voting Share, any other securities, the Automatic Exchange Right, the Automatic Exchange Rights on Liquidation and any money or other property which may be held by the Trustee from time to time pursuant to this Agreement. "TRUSTEE" means CIBC Mellon Trust Company and, subject to the provisions of Article 11, includes any successor trustee. "VOTING RIGHTS" means the voting rights attached to the AMVESCAP Special Voting Share. SECTION 1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this Agreement into Articles, Sections and other portions and the insertion of headings are for convenience of reference only and should not affect the construction or interpretation of this Agreement. Unless otherwise indicated, all references to an "ARTICLE" or "SECTION" followed by a number and/or a letter refer to the specified Article or Section of this Agreement. The terms "THIS AGREEMENT", "HEREOF", "HEREIN" and "HEREUNDER" and similar expressions refer to this Agreement and not to any particular Article, Section or other portion hereof and include any agreement or instrument supplementary or ancillary hereto. SECTION 1.3 NUMBER, GENDER, ETC. Words importing the singular number only shall include the plural and vice versa. Words importing any gender shall include all genders. SECTION 1.4 DATE FOR ANY ACTION If any date on which any action is required to be taken under this Agreement is not a Business Day, such action shall be required to be taken on the next succeeding Business Day. 7 -7- ARTICLE 2 PURPOSE OF AGREEMENT SECTION 2.1 ESTABLISHMENT OF TRUST The purpose of this Agreement is to create the Trust for the benefit of the Beneficiaries, as herein provided. The Trustee will hold the AMVESCAP Special Voting Share in order to enable the Trustee to exercise the Voting Rights and will hold the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation in order to enable the Trustee to exercise such rights, in each case as trustee for and on behalf of the Beneficiaries as provided in this Agreement. ARTICLE 3 AMVESCAP SPECIAL VOTING SHARE SECTION 3.1 ISSUE AND OWNERSHIP OF THE AMVESCAP SPECIAL VOTING SHARE Immediately following execution of this Agreement, AMVESCAP shall issue to the Trustee the AMVESCAP Special Voting Share (and shall deliver the certificate representing such share to the Trustee) to be hereafter held of record by the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries and in accordance with the provisions of this Agreement. AMVESCAP hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for the issuance of the AMVESCAP Special Voting Share by AMVESCAP to the Trustee. During the term of the Trust and subject to the terms and conditions of this Agreement, the Trustee shall possess and be vested with full legal ownership of the AMVESCAP Special Voting Share and shall be entitled to exercise all of the rights and powers of an owner with respect to the AMVESCAP Special Voting Share provided that the Trustee shall: (a) hold the AMVESCAP Special Voting Share and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this Agreement; and (b) except as specifically authorized by this Agreement, have no power or authority to sell, transfer, vote or otherwise deal in or with the AMVESCAP Special Voting Share and the AMVESCAP Special Voting Share shall not be used or disposed of by the Trustee for any purpose other than the purposes for which this Trust is created pursuant to this Agreement. SECTION 3.2 LEGENDED SHARE CERTIFICATES Exchangeco will cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of their right to instruct the 8 -8- Trustee with respect to the exercise of the Voting Rights in respect of the Exchangeable Shares of the Beneficiaries. SECTION 3.3 SAFE KEEPING OF CERTIFICATE The certificate representing the AMVESCAP Special Voting Share shall at all times be held in safe keeping by the Trustee or it duly authorized agent. ARTICLE 4 EXERCISE OF VOTING RIGHTS SECTION 4.1 VOTING RIGHTS The Trustee, as the holder of record of the AMVESCAP Special Voting Share, shall be entitled to all of the Voting Rights, including the right to vote in person or by proxy attaching to the AMVESCAP Special Voting Share on any matters, questions, proposals or propositions whatsoever that may properly come before the shareholders of AMVESCAP at an AMVESCAP Meeting. The Voting Rights shall be and remain vested in and exercised by the Trustee subject to the terms of this Agreement. Subject to Section 8.15: (a) the Trustee shall exercise the Voting Rights only on the basis of instructions received pursuant to this Article 4 from Beneficiaries on the record date established by AMVESCAP or by applicable law for such AMVESCAP Meeting who are entitled to instruct the Trustee as to the voting thereof; and (b) to the extent that no instructions are received from a Beneficiary with respect to the Voting Rights to which such Beneficiary is entitled, the Trustee shall not exercise or permit the exercise of such Voting Rights. SECTION 4.2 NUMBER OF VOTES (1) With respect to all meetings of shareholders of AMVESCAP at which holders of AMVESCAP Ordinary Shares are entitled to vote (each, an "AMVESCAP MEETING"), each Beneficiary shall be entitled to instruct the Trustee to cast and exercise the votes comprised in the Voting Rights for each Exchangeable Share owned of record by such Beneficiary on the record date established by AMVESCAP or by applicable law for such AMVESCAP Meeting (the "Beneficiary Votes"), in respect of each matter, question, proposal or proposition to be voted on at such AMVESCAP Meeting. (2) The Voting Rights on a poll at an AMVESCAP Meeting shall consist of a number of votes equal to one for every four outstanding Exchangeable Shares from time to time not owned by AMVESCAP and its Affiliates and for which the Trustee has received voting instructions from the Beneficiary. Pursuant to 9 -9- the terms of the Special Voting Share, the Trustee or its proxy is entitled on a vote on a show of hands to one vote in addition to any votes which may be cast by a Beneficiary (or its nominee) on a show of hands as proxy for the Trustee. Any Beneficiary who chooses to attend an AMVESCAP Meeting in person and who is entitled to vote in accordance with section 4.8(2) will be entitled to one vote on a show of hands. SECTION 4.3 MAILINGS TO SHAREHOLDERS (1) With respect to each AMVESCAP Meeting, the Trustee will use its reasonable efforts promptly to mail or cause to be mailed (or otherwise communicate in the same manner as AMVESCAP utilizes in communications to holders of AMVESCAP Ordinary Shares subject to applicable regulatory requirements and provided that such manner of communications is reasonably available to the Trustee) to each of the Beneficiaries named in the List, such mailing or communication to commence wherever practicable on the same day as the mailing or notice (or other communication) with respect thereto is commenced by AMVESCAP to its shareholders: (a) a copy of such notice, together with any related materials, including, without limitation, any circular or information statement or listing particulars, to be provided to shareholders of AMVESCAP; (b) a statement that such Beneficiary is entitled to instruct the Trustee as to the exercise of the Beneficiary Votes with respect to such AMVESCAP Meeting or, pursuant to Section 4.7, to attend such AMVESCAP Meeting and to exercise personally the Beneficiary Votes thereat; (c) a statement as to the manner in which such instructions may be given to the Trustee, including an express indication that instructions may be given to the Trustee to give: (i) a proxy to such Beneficiary or his, her or its designee to exercise personally the Beneficiary Votes; or (ii) a proxy to a designated agent or other representative of AMVESCAP to exercise such Beneficiary Votes; (d) a statement that if no such instructions are received from the Beneficiary, the Beneficiary Votes to which such Beneficiary is entitled will not be exercised; (e) a form of direction whereby the Beneficiary may so direct and instruct the Trustee as contemplated herein; and 10 -10- (f) a statement of the time and date by which such instructions must be received by the Trustee in order to be binding upon it, which in the case of an AMVESCAP Meeting shall not be earlier than the close of business on the fourth Business Day prior to such meeting, and of the method for revoking or amending such instructions. (2) The materials referred to in this Section 4.3 are to be provided to the Trustee by AMVESCAP, and the materials referred to in Section 4.3(1)(c), Section 4.3(1)(e) and Section 4.3(1)(f) shall (if reasonably practicable to do so) be subject to reasonable comment by the Trustee in a timely manner. Subject to the foregoing, AMVESCAP shall ensure that the materials to be provided to the Trustee are provided in sufficient time to permit the Trustee to comment as aforesaid and to send all materials to each Beneficiary at the same time as such materials are first sent to holders of AMVESCAP Ordinary Shares. AMVESCAP agrees not to communicate with holders of AMVESCAP Ordinary Shares with respect to the materials referred to in this Section 4.3 otherwise than by mail unless such method of communication is also reasonably available to the Trustee for communication with the Beneficiaries. (3) For the purpose of determining Beneficiary Votes to which a Beneficiary is entitled in respect of any AMVESCAP Meeting, the number of Exchangeable Shares owned of record by the Beneficiary shall be determined at the close of business on the record date established by AMVESCAP or by applicable law for purposes of determining shareholders entitled to vote at such AMVESCAP Meeting. AMVESCAP will notify the Trustee of any decision of the board of directors of AMVESCAP with respect to the calling of any AMVESCAP Meeting and shall provide all necessary information and materials to the Trustee in each case promptly and in any event in sufficient time to enable the Trustee to perform its obligations contemplated by this Section 4.3. SECTION 4.4 COPIES OF SHAREHOLDER INFORMATION AMVESCAP will deliver to the Trustee copies of all proxy materials (including notices of AMVESCAP Meetings but excluding proxies to vote AMVESCAP Ordinary Shares), information statements, reports (including, without limitation, all interim and annual financial statements) and other written communications that, in each case, are to be distributed by AMVESCAP from time to time to holders of AMVESCAP Ordinary Shares in sufficient quantities and in sufficient time so as to enable the Trustee to send those materials to each Beneficiary at the same time as such materials are first sent to holders of AMVESCAP Ordinary Shares. The Trustee will mail or otherwise send to each Beneficiary, at the expense of AMVESCAP, copies of all such materials (and all materials specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by AMVESCAP) 11 -11- received by the Trustee from AMVESCAP contemporaneously with the sending of such materials to holders of AMVESCAP Ordinary Shares. The Trustee will also make available for inspection by any Beneficiary at the Trustee's principal office in Toronto all proxy materials, information statements, reports and other written communications that are: (a) received by the Trustee as the registered holder of the AMVESCAP Special Voting Share and made available by AMVESCAP generally to the holders of AMVESCAP Ordinary Shares; or (b) specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by AMVESCAP. SECTION 4.5 OTHER MATERIALS As soon as reasonably practicable after receipt by AMVESCAP or shareholders of AMVESCAP (if such receipt is known by AMVESCAP) of any material sent or given by or on behalf of a third party to holders of AMVESCAP Ordinary Shares generally, including without limitation, dissident proxy and information circulars (and related information and material) and take-over bid and securities exchange take-over bid circulars (and related information and material), provided such material has not been sent to the Beneficiaries by or on behalf of such third party, AMVESCAP shall use its reasonable efforts to obtain and deliver to the Trustee copies thereof in sufficient quantities so as to enable the Trustee to forward such material (unless the same has been provided directly to Beneficiaries by such third party) to each Beneficiary as soon as possible thereafter. As soon as reasonably practicable after receipt thereof, the Trustee will mail or otherwise send to each Beneficiary, at the expense of AMVESCAP, copies of all such materials received by the Trustee from AMVESCAP. The Trustee will also make available for inspection by any Beneficiary at the Trustee's principal office in Toronto copies of all such materials. SECTION 4.6 LIST OF PERSONS ENTITLED TO VOTE Exchangeco shall, (a) prior to each annual, general and extraordinary AMVESCAP Meeting and (b) forthwith upon each request made at any time by the Trustee in writing, prepare or cause to be prepared a list (a "LIST") of the names and addresses of the Beneficiaries arranged in alphabetical order and showing the number of Exchangeable Shares held of record by each such Beneficiary, in each case at the close of business on the date specified by the Trustee in such request or, in the case of a List prepared in connection with an AMVESCAP Meeting, at the close of business on the record date established by AMVESCAP or pursuant to applicable law for determining the holders of AMVESCAP Ordinary Shares entitled to receive notice of and/or to vote at such AMVESCAP Meeting. Each such List shall be delivered to the Trustee promptly after receipt by Exchangeco of such request or the 12 -12- record date for such meeting and in any event within sufficient time as to permit the Trustee to perform its obligations under this Agreement. AMVESCAP agrees to give Exchangeco notice (with a copy to the Trustee) of the calling of any AMVESCAP Meeting, together with the record date therefor, sufficiently prior to the date of the calling of such meeting so as to enable Exchangeco to perform its obligations under this Section 4.6. SECTION 4.7 ENTITLEMENT TO DIRECT VOTES Subject to Sections 4.8 and 4.11, any Beneficiary named in a List prepared in connection with any AMVESCAP Meeting will be entitled (a) to instruct the Trustee in the manner described in Section 4.3 with respect to the exercise of the Beneficiary Votes to which such Beneficiary is entitled or (b) to attend such meeting and personally exercise thereat, as the proxy of the Trustee, the Beneficiary Votes to which such Beneficiary is entitled. SECTION 4.8 VOTING BY TRUSTEE AND ATTENDANCE OF TRUSTEE REPRESENTATIVE AT MEETING (1) In connection with each AMVESCAP Meeting, the Trustee shall exercise, either in person or by proxy, in accordance with the instructions received from a Beneficiary pursuant to Section 4.3, the Beneficiary Votes as to which such Beneficiary is entitled to direct the vote (or any lesser number thereof as may be set forth in the instructions) other than any Beneficiary Votes the subject of section 4.8(2); provided, however, that such written instructions are received by the Trustee from the Beneficiary prior to the time and date fixed by the Trustee for receipt of such instruction in the notice given by the Trustee to the Beneficiary pursuant to Section 4.3. (2) The Trustee shall cause a representative who is empowered by it to sign and deliver, on behalf of the Trustee, proxies for Voting Rights to attend each AMVESCAP Meeting. Upon submission by a Beneficiary (or its designee) named in the List prepared in connection with the relevant meeting of identification satisfactory to the Trustee's representative, and at the Beneficiary's request, such representative shall sign and deliver to such Beneficiary (or its designee) a proxy to exercise personally the Beneficiary Votes as to which such Beneficiary is otherwise entitled hereunder to direct the vote, if such Beneficiary either (i) has not previously given the Trustee instructions pursuant to Section 4.3 in respect of such meeting or (ii) submits to such representative written revocation of any such previous instructions. At such meeting, the Beneficiary (or its designee) exercising such Beneficiary Votes in accordance with such proxy shall have the same rights in respect of such Beneficiary Votes as the Trustee to speak at the meeting in favour of any matter, question, proposal or proposition, to vote by way of ballot at the meeting in respect of any matter, question, proposal or proposition, and to 13 -13- vote at such meeting by way of a show of hands in respect of any matter, question or proposition. SECTION 4.9 DISTRIBUTION OF WRITTEN MATERIALS Any written materials distributed by the Trustee pursuant to this Agreement shall be sent by mail (or otherwise communicated in the same manner as AMVESCAP utilizes in communications to holders of AMVESCAP Ordinary Shares subject to applicable regulatory requirements and provided such manner of communications is reasonably available to the Trustee) to each Beneficiary at its address as shown on the books of Exchangeco. AMVESCAP agrees not to communicate with holders of AMVESCAP Ordinary Shares with respect to such written materials otherwise than by mail unless such method of communication is also reasonably available to the Trustee for communication with the Beneficiaries. Exchangeco shall provide or cause to be provided to the Trustee for purposes of communication, on a timely basis and without charge or other expense: (a) a current List; and (b) upon the request of the Trustee, mailing labels to enable the Trustee to carry out its duties under this Agreement. SECTION 4.10 TERMINATION OF VOTING RIGHTS All of the rights of a Beneficiary with respect to the Beneficiary Votes exercisable in respect of the Exchangeable Shares held by such Beneficiary, including the right to instruct the Trustee as to the voting of or to vote personally such Beneficiary Votes, shall be deemed to be surrendered by the Beneficiary to AMVESCAP or Callco, as the case may be, and such Beneficiary Votes and the Voting Rights represented thereby shall cease immediately upon (i) the delivery by such holder to the Trustee of the certificates representing such Exchangeable Shares in connection with the occurrence of the automatic exchange of Exchangeable Shares for AMVESCAP Ordinary Shares, as specified in Article 5 (unless AMVESCAP shall not have delivered the requisite AMVESCAP Ordinary Shares issuable in exchange therefor to the Trustee pending delivery to the Beneficiaries), or (ii) the retraction or redemption of Exchangeable Shares pursuant to section 6 or 7 of the Share Provisions, or (iii) the effective date of the liquidation, dissolution or winding-up of Exchangeco pursuant to section 5 of the Share Provisions, or (iv) the purchase of Exchangeable Shares from the holder thereof by Callco pursuant to the exercise by Callco of the Retraction Call Right, the Redemption Call Right or the Liquidation Call Right. SECTION 4.11 DISCLOSURE OF INTEREST IN EXCHANGEABLE SHARES The Trustee and/or Exchangeco shall be entitled to require any Beneficiary or any person who the Trustee and/or Exchangeco know or have reasonable cause to 14 -14- believe to hold any interest whatsoever in an Exchangeable Share to confirm that fact or to give such details as to whom has an interest in such Exchangeable Share as would be required (if the Exchangeable Shares were a class of "equity shares" of Exchangeco) under section 101 of the Securities Act (Ontario), as amended from time to time, or as would be required under the articles of AMVESCAP or any laws or regulations, or pursuant to the rules or regulations of any regulatory authority, of the United Kingdom if the Exchangeable Shares were AMVESCAP Ordinary Shares. If a Beneficiary does not provide the information required to be provided by such Beneficiary pursuant to this Section 4.11, the board of directors of AMVESCAP may take any action permitted under the articles of AMVESCAP or any laws or regulations, or pursuant to the rules or regulations of any regulatory authority, of the United Kingdom with respect to the Voting Rights relating to the Exchangeable Shares held by such Beneficiary. ARTICLE 5 AUTOMATIC EXCHANGE SECTION 5.1 AUTOMATIC EXCHANGE (1) AMVESCAP hereby agrees with the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries that the Trustee shall have (i) the Automatic Exchange Right, and (ii) the Automatic Exchange Rights on Liquidation, all in accordance with the provisions of this Agreement. The Automatic Exchange Right shall represent an agreement on the terms set out herein between AMVESCAP and the Trustee (acting on behalf of the Beneficiaries) that upon the occurrence of an Insolvency Event, AMVESCAP will purchase from each and every Beneficiary all of the Exchangeable Shares held by such Beneficiary. The Automatic Exchange Rights on Liquidation shall represent an agreement on the terms set out herein between AMVESCAP and the Trustee (acting on behalf of the Beneficiaries) that AMVESCAP will purchase from each and every Beneficiary all of the outstanding Exchangeable Shares held by such Beneficiary on the fifth Business Day prior to the Liquidation Event Effective Date. AMVESCAP hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for agreeing with the Trustee (acting on behalf of the Beneficiaries) to be bound by the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation. (2) During the term of the Trust and subject to the terms and conditions of this Agreement, the Trustee shall possess and be vested with full legal ownership of the Automatic Exchange Right and the Automatic Exchange Rights on 15 -15- Liquidation and shall be entitled to exercise all of the rights and powers of an owner with respect to the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation, provided that the Trustee shall: (a) hold the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this Agreement; and (b) except as specifically authorized by this Agreement, have no power or authority to exercise or otherwise deal in or with the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation, and the Trustee shall not exercise any such rights for any purpose other than the purposes for which the Trust is created pursuant to this Agreement. (3) The obligations of AMVESCAP to issue AMVESCAP Ordinary Shares pursuant to the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation are subject to all applicable laws and regulatory or stock exchange requirements. SECTION 5.2 LEGENDED SHARE CERTIFICATES Exchangeco will cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation. SECTION 5.3 AUTOMATIC EXCHANGE RIGHT (1) The purchase price payable by AMVESCAP for each Exchangeable Share to be purchased by AMVESCAP under the Automatic Exchange Right shall be an amount per share equal to (i) the Current Market Price of an AMVESCAP Ordinary Share on the last Business Day prior to the day of closing of the purchase and sale of such Exchangeable Share under the Automatic Exchange Right, which shall be satisfied in full by AMVESCAP causing to be delivered to such holder one AMVESCAP Ordinary Share, plus (ii) to the extent not paid by Exchangeco on the designated payment date therefor, an additional amount equal to and in full satisfaction of the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the closing of the purchase and sale. In connection with each exercise of the Automatic Exchange Right, AMVESCAP shall provide to the Trustee an Officer's Certificate setting forth the calculation of the purchase price for each Exchangeable Share. The purchase price for each such Exchangeable Share so purchased may be satisfied only by AMVESCAP issuing and delivering or causing to be 16 -16- delivered to the Trustee, on behalf of the relevant Beneficiary, one AMVESCAP Ordinary Share and on the applicable payment date a cheque for the balance, if any, of the purchase price, in each case less any amounts withheld pursuant to Section 5.10. Upon payment by AMVESCAP of such purchase price the relevant Beneficiary shall cease to have any right to be paid by Exchangeco any amount in respect of declared and unpaid dividends on each such Exchangeable Share. (2) Immediately upon the occurrence of an Insolvency Event, the closing of the transaction of purchase and sale contemplated by the Automatic Exchange Right shall be deemed to have occurred, and each Beneficiary shall be deemed to have transferred to AMVESCAP all of the Beneficiary's right, title and interest in and to such Beneficiary's Exchangeable Shares free and clear of any lien, claim or encumbrance and the related interest in the Trust Estate, any right of each such Beneficiary to receive declared and unpaid dividends from Exchangeco shall be deemed to be satisfied and discharged and each such Beneficiary shall cease to be a holder of such Exchangeable Shares and AMVESCAP shall issue to the Beneficiary the AMVESCAP Ordinary Shares issuable upon the automatic exchange of Exchangeable Shares for AMVESCAP Ordinary Shares and on the applicable payment date shall deliver to the Trustee for delivery to the Beneficiary a cheque for the balance, if any, of the total purchase price for such Exchange Shares, without interest, in each case less any amounts withheld pursuant to Section 5.10. Concurrently with such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary shall become the holder of the AMVESCAP Ordinary Shares issued pursuant to the automatic exchange of such Beneficiary's Exchangeable Shares for AMVESCAP Ordinary Shares and the certificates held by the Beneficiary previously representing the Exchangeable Shares exchanged by the Beneficiary with AMVESCAP pursuant to such automatic exchange shall thereafter be deemed to represent AMVESCAP Ordinary Shares issued to the Beneficiary by AMVESCAP pursuant to such automatic exchange. Upon the request of a Beneficiary and the surrender by the Beneficiary of Exchangeable Share certificates deemed to represent AMVESCAP Ordinary Shares, duly endorsed in blank and accompanied by such instruments of transfer as AMVESCAP may reasonably require, AMVESCAP shall deliver or cause to be delivered to the Beneficiary certificates representing the AMVESCAP Ordinary Shares of which the Beneficiary is the holder. SECTION 5.4 FAILURE TO RETRACT Upon the occurrence of an event referred to in paragraph (iv) of the definition of Insolvency Event, Exchangeco hereby agrees with the Trustee and in favour of the Beneficiary promptly to forward or cause to be forwarded to the Trustee all relevant 17 -17- materials delivered by the Beneficiary to Exchangeco or to the transfer agent of the Exchangeable Shares (including without limitation, a copy of the retraction request delivered pursuant to section 6(1) of the Share Provisions) in connection with such proposed redemption of the Retracted Shares. SECTION 5.5 STAMP TAXES Upon any sale of Exchangeable Shares to AMVESCAP pursuant to the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation, the share certificate or certificates representing AMVESCAP Ordinary Shares to be delivered in connection with the payment of the total purchase price therefor shall be registered in the name of the Beneficiary of the Exchangeable Shares so sold or in such names as such Beneficiary may otherwise direct in writing provided such direction is received by AMVESCAP prior to the time such shares are issued without charge to the holder of the Exchangeable Shares so sold; provided, however, that such Beneficiary (a) shall pay (and none of AMVESCAP, Exchangeco or the Trustee shall be required to pay) any Stamp Taxes that may be payable in respect of any transfer of such Exchangeable Shares to AMVESCAP or in respect of the issuance or delivery of such AMVESCAP Ordinary Shares to such Beneficiary or any other person including, without limitation, in the event that AMVESCAP Ordinary Shares are being issued or transferred in the name of a clearing service or depositary or a nominee thereof, and (b) shall have evidenced to the satisfaction of the Trustee, AMVESCAP and Exchangeco that such Stamp Taxes, if any, have been paid. SECTION 5.6 NOTICE OF INSOLVENCY EVENT As soon as practicable following the occurrence of an Insolvency Event or any event that with the giving of notice or the passage of time or both would be an Insolvency Event, Exchangeco and AMVESCAP shall give written notice thereof to the Trustee. As soon as practicable following the receipt of notice from Exchangeco and AMVESCAP of the occurrence of an Insolvency Event, or upon the Trustee becoming aware of an Insolvency Event, the Trustee will mail to each Beneficiary, at the expense of AMVESCAP (such funds to be received in advance), a notice of such Insolvency Event in the form provided by AMVESCAP, which notice shall contain a brief statement of the rights of the Beneficiaries with respect to the Automatic Exchange Right. SECTION 5.7 LISTING OF AMVESCAP ORDINARY SHARES AMVESCAP covenants that if any AMVESCAP Ordinary Shares to be issued and delivered pursuant to the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation require registration or qualification with or approval of or the filing of any document, including any prospectus or similar document, or the taking of any proceeding with or the obtaining of any order, ruling or consent from any governmental or regulatory authority or stock exchange under any United Kingdom or Canadian federal, provincial or territorial law or regulation 18 -18- or pursuant to the rules and regulations of any regulatory authority or the fulfillment of any other United Kingdom or Canadian legal requirement before such shares may be issued and delivered by AMVESCAP to the initial holder thereof or in order that such shares may be freely traded thereafter (other than any restrictions of general application on transfer by reason of a holder being a "CONTROL PERSON" or the equivalent of AMVESCAP for purposes of Canadian securities law or any United Kingdom equivalent), AMVESCAP will expeditiously and in good faith take all such actions and do all such things as are reasonably necessary or desirable to cause such AMVESCAP Ordinary Shares to be and remain duly registered, qualified or approved. AMVESCAP will expeditiously and in good faith take all such actions and do all such things as are reasonably necessary or desirable to cause all AMVESCAP Ordinary Shares to be delivered pursuant to the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation to be listed, quoted or posted for trading on all stock exchanges and quotation systems on which issued AMVESCAP Ordinary Shares have been listed by AMVESCAP and remain listed and are quoted or posted for trading at such time. SECTION 5.8 AMVESCAP ORDINARY SHARES AMVESCAP hereby represents, warrants and covenants that the AMVESCAP Ordinary Shares issuable as described herein will be duly authorized and validly issued as fully paid and shall be free and clear of any lien, claim or encumbrance. SECTION 5.9 AUTOMATIC EXCHANGE ON LIQUIDATION OF AMVESCAP (1) AMVESCAP will give the Trustee written notice of each of the following events at the time set forth below: (a) in the event of any determination by the board of directors of AMVESCAP to institute voluntary liquidation, dissolution or winding-up proceedings with respect to AMVESCAP or to effect any other distribution of assets of AMVESCAP among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; and (b) as soon as practicable following the earlier of (A) receipt by AMVESCAP of notice of, and (B) AMVESCAP otherwise becoming aware of any instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of AMVESCAP or to effect any other distribution of assets of AMVESCAP among its shareholders for the purpose of winding up its affairs, in each case where AMVESCAP has failed to contest in good faith any such proceeding commenced in respect of AMVESCAP within 30 days of becoming aware thereof. 19 -19- (2) As soon as practicable following receipt by the Trustee from AMVESCAP of notice of any event (a "LIQUIDATION EVENT") contemplated by Section 5.9(1)(a) or 5.9(1)(b), the Trustee will give notice thereof to the Beneficiaries. Such notice shall be provided to the Trustee by AMVESCAP and shall include a brief description of the automatic exchange of Exchangeable Shares for AMVESCAP Ordinary Shares provided for in Section 5.9(3). (3) In order that the Beneficiaries will be able to participate on a pro rata basis with the holders of AMVESCAP Ordinary Shares in the distribution of assets of AMVESCAP in connection with a Liquidation Event, on the fifth Business Day prior to the effective date (the "LIQUIDATION EVENT EFFECTIVE DATE") of a Liquidation Event, all of the then outstanding Exchangeable Shares shall be automatically exchanged for AMVESCAP Ordinary Shares. To effect such automatic exchange, AMVESCAP shall purchase on the fifth Business Day prior to the Liquidation Event Effective Date each Exchangeable Share then outstanding and held by Beneficiaries, and each Beneficiary shall sell the Exchangeable Shares held by it at such time, free and clear of any lien, claim or encumbrance, for a purchase price per share equal to (i) the Current Market Price of an AMVESCAP Ordinary Share on the fifth Business Day prior to the Liquidation Event Effective Date, which shall be satisfied in full by AMVESCAP issuing to the Beneficiary one AMVESCAP Ordinary Share, plus (ii) to the extent not paid by Exchangeco on the designated payment date therefor, an additional amount equal to and in full satisfaction of the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the date of the exchange. AMVESCAP shall provide the Trustee with an Officer's Certificate in connection with each automatic exchange setting forth the calculation of the purchase price for each Exchangeable Share. (4) On the fifth Business Day prior to the Liquidation Event Effective Date, the closing of the transaction of purchase and sale contemplated by the automatic exchange of Exchangeable Shares for AMVESCAP Ordinary Shares shall be deemed to have occurred, and each Beneficiary shall be deemed to have transferred to AMVESCAP all of the Beneficiary's right, title and interest in and to such Beneficiary's Exchangeable Shares free and clear of any lien, claim or encumbrance and the related interest in the Trust Estate, any right of each such Beneficiary to receive declared and unpaid dividends from Exchangeco shall be deemed to be satisfied and discharged, and each such Beneficiary shall cease to be a holder of such Exchangeable Shares and AMVESCAP shall issue to the Beneficiary the AMVESCAP Ordinary Shares issuable upon the automatic exchange of Exchangeable Shares for AMVESCAP Ordinary Shares and on the applicable payment date shall deliver to the Trustee for delivery to the Beneficiary a cheque for the balance, 20 -20- if any, of the total purchase price for such Exchangeable Shares, without interest, in each case less any amounts withheld pursuant to Section 5.10. Concurrently with such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary shall become the holder of the AMVESCAP Ordinary Shares issued pursuant to the automatic exchange of such Beneficiary's Exchangeable Shares for AMVESCAP Ordinary Shares and the certificates held by the Beneficiary previously representing the Exchangeable Shares exchanged by the Beneficiary with AMVESCAP pursuant to such automatic exchange shall thereafter be deemed to represent AMVESCAP Ordinary Shares issued to the Beneficiary by AMVESCAP pursuant to such automatic exchange. Upon the request of a Beneficiary and the surrender by the Beneficiary of Exchangeable Share certificates deemed to represent AMVESCAP Ordinary Shares, duly endorsed in blank and accompanied by such instruments of transfer as AMVESCAP may reasonably require, AMVESCAP shall deliver or cause to be delivered to the Beneficiary certificates representing the AMVESCAP Ordinary Shares of which the Beneficiary is the holder. SECTION 5.10 WITHHOLDING RIGHTS AMVESCAP, Exchangeco and the Trustee shall be entitled to deduct and withhold from any consideration otherwise payable under this Agreement to any holder of Exchangeable Shares or AMVESCAP Ordinary Shares such amounts as AMVESCAP, Exchangeco or the Trustee is required to deduct and withhold with respect to such payment under the Income Tax Act (Canada) or United Kingdom tax laws or any provision of provincial, state, local or foreign tax law, in each case as amended or succeeded. The Trustee may act and rely on the advice of counsel with respect to such matters. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder of the shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, AMVESCAP, Exchangeco and the Trustee are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to AMVESCAP, Exchangeco or the Trustee, as the case may be, to enable it to comply with such deduction or withholding requirement and AMVESCAP, Exchangeco or the Trustee shall notify the holder thereof and remit to such holder any unapplied balance of the net proceeds of such sale. AMVESCAP represents and warrants that, based upon facts currently known to it, it has no current intention, as at the date of this Agreement, to deduct or withhold from any dividend paid to holders of Exchangeable Shares any amounts under the United Kingdom tax laws. 21 -21- ARTICLE 6 RESTRICTIONS ON ISSUE OF AMVESCAP SPECIAL VOTING SHARES SECTION 6.1 ISSUE OF ADDITIONAL SHARES During the term of this Agreement, AMVESCAP will not, without the consent of the holders at the relevant time of Exchangeable Shares, given in accordance with section 10(2) of the Share Provisions, issue any additional AMVESCAP Special Voting Shares. ARTICLE 7 RIGHTS OF ENTITLEMENT SECTION 7.1 GRANT OF RIGHTS OF ENTITLEMENT At the time that a Debenture is issued in accordance with the terms of the Indenture, the holder of such Debenture shall concurrently be granted Rights of Entitlement which shall be evidenced by a Certificate of Entitlement issued by Exchangeco. SECTION 7.2 TRANSFER AND SURRENDER OF CERTIFICATES OF ENTITLEMENT Any Certificate of Entitlement shall be annexed to the Debenture to which it relates and may only be transferred or surrendered together with the Debenture to which it is so annexed. ARTICLE 8 CONCERNING THE TRUSTEE SECTION 8.1 POWERS AND DUTIES OF THE TRUSTEE (1) The rights, powers, duties and authorities of the Trustee under this Agreement, in its capacity as Trustee of the Trust, shall include: (a) receipt and deposit of the AMVESCAP Special Voting Share from AMVESCAP as Trustee for and on behalf of the Beneficiaries in accordance with the provisions of this Agreement; (b) granting proxies and distributing materials to Beneficiaries as provided in this Agreement; (c) voting the Beneficiary Votes in accordance with the provisions of this Agreement; (d) receiving the grant of the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation from AMVESCAP as 22 -22- Trustee for and on behalf of the Beneficiaries in accordance with the provisions of this Agreement; (e) enforcing the benefit of the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation, in each case in accordance with the provisions of this Agreement, and in connection therewith receiving from Beneficiaries Exchangeable Shares and other requisite documents and distributing to such Beneficiaries AMVESCAP Ordinary Shares and cheques, if any, to which such Beneficiaries are entitled pursuant to the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation, as the case may be; (f) holding title to the Trust Estate; (g) investing any moneys forming, from time to time, a part of the Trust Estate as provided in this Agreement; (h) taking action at the direction of a Beneficiary or Beneficiaries to enforce the obligations of AMVESCAP and Exchangeco under this Agreement; and (i) taking such other actions and doing such other things as are specifically provided in this Agreement to be carried out by the Trustee whether alone, jointly or in the alternative. (2) In the exercise of such rights, powers, duties and authorities the Trustee shall have (and is granted) such incidental and additional rights, powers, duties and authority not in conflict with any of the provisions of this Agreement as the Trustee, acting in good faith and in the reasonable exercise of its discretion, may deem necessary, appropriate or desirable to effect the purpose of the Trust. Any exercise of such discretionary rights, powers, duties and authorities by the Trustee shall be final, conclusive and binding upon all persons. (3) The Trustee in exercising its rights, powers, duties and authorities hereunder shall act honestly and in good faith and with a view to the best interests of the Beneficiaries and shall exercise the care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances. (4) The Trustee shall not be bound to give notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless and until it shall be specifically required to do so under the terms hereof; nor shall the Trustee be required to take any notice of, or to do, or to take any act, action or proceeding as a result of any default or breach of any provision hereunder, unless and until notified in writing of such default or breach, which notices 23 -23- shall distinctly specify the default or breach desired to be brought to the attention of the Trustee, and in the absence of such notice the Trustee may for all purposes of this Agreement conclusively assume that no default or breach has been made in the observance or performance of any of the representations, warranties, covenants, agreements or conditions contained herein. SECTION 8.2 NO CONFLICT OF INTEREST The Trustee represents to AMVESCAP and Exchangeco that at the date of execution and delivery of this Agreement there exists no material conflict of interest in the role of the Trustee as a fiduciary hereunder and the role of the Trustee in any other capacity. The Trustee shall, within 90 days after it becomes aware that such material conflict of interest exists, either eliminate such material conflict of interest or resign in the manner and with the effect specified in Article 11. If, notwithstanding the foregoing provisions of this Section 8.2, the Trustee has such a material conflict of interest, the validity and enforceability of this Agreement shall not be affected in any manner whatsoever by reason only of the existence of such material conflict of interest. If the Trustee contravenes the foregoing provisions of this Section 8.2, any interested party may apply to the Superior Court of Justice (Ontario) for an order that the Trustee be replaced as Trustee hereunder. SECTION 8.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC. (1) AMVESCAP and Exchangeco irrevocably authorize the Trustee, from time to time, to: (a) consult, communicate and otherwise deal with the respective registrars and transfer agents, and with any such subsequent registrar or transfer agent, of the Exchangeable Shares and AMVESCAP Ordinary Shares; and (b) requisition, from time to time, (i) from any such registrar or transfer agent any information readily available from the records maintained by it which the Trustee may reasonably require for the discharge of its duties and responsibilities under this Agreement and (ii) from the transfer agent of AMVESCAP Ordinary Shares, and any subsequent transfer agent of such shares, the share certificates issuable upon the exercise from time to time of the Automatic Exchange Right and pursuant to the Automatic Exchange Rights on Liquidation. (2) AMVESCAP and Exchangeco shall irrevocably authorize their respective registrars and transfer agents to comply with all such requests. AMVESCAP covenants that it will supply its transfer agent with duly executed share certificates for the purpose of completing the exercise from time to time of the 24 -24- Automatic Exchange Right and the Automatic Exchange Rights on Liquidation, in each case pursuant to Article 5. SECTION 8.4 BOOKS AND RECORDS The Trustee shall keep available for inspection by AMVESCAP and Exchangeco at the Trustee's principal office in Toronto correct and complete books and records of account relating to the Trust created by this Agreement, including without limitation, all relevant data relating to mailings and instructions to and from Beneficiaries and all transactions pursuant to the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation. On or before January 15, 2001, and on or before January 15th in every year thereafter, so long as the AMVESCAP Special Voting Share is registered in the name of the Trustee, the Trustee shall transmit to AMVESCAP and Exchangeco a brief report, dated as of the preceding December 31st, with respect to: (a) the property and funds comprising the Trust Estate as of that date; (b) the number of exercises of the Automatic Exchange Right, if any, and the aggregate number of Exchangeable Shares received by the Trustee on behalf of Beneficiaries in consideration of the issuance by AMVESCAP of AMVESCAP Ordinary Shares in connection with the Automatic Exchange Right, during the calendar year ended on such December 31st; and (c) any action taken by the Trustee in the performance of its duties under this Agreement which it had not previously reported. SECTION 8.5 INCOME TAX RETURNS AND REPORTS The Trustee shall, to the extent necessary, prepare and file, or cause to be prepared and filed, on behalf of the Trust appropriate United Kingdom and Canadian income tax returns and any other returns or reports as may be required by applicable law or pursuant to the rules and regulations of any securities exchange or other trading system through which the Exchangeable Shares are traded. In connection therewith, the Trustee may obtain the advice and assistance of such experts or advisors as the Trustee considers necessary or advisable (who may be experts or advisors to AMVESCAP or Exchangeco). If requested by the Trustee, AMVESCAP or Exchangeco shall retain qualified experts or advisors for the purpose of providing such tax advice or assistance. SECTION 8.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE (1) The Trustee shall exercise any or all of the rights, duties, powers or authorities vested in it by this Agreement at the request, order or direction of any Beneficiary upon such Beneficiary furnishing to the Trustee reasonable 25 -25- funding, security or indemnity against the costs, expenses and liabilities which may be incurred by the Trustee therein or thereby, provided that no Beneficiary shall be obligated to furnish to the Trustee any such funding, security or indemnity in connection with the exercise by the Trustee of any of its rights, duties, powers and authorities with respect to the AMVESCAP Special Voting Share pursuant to Article 4, subject to Section 8.15, and with respect to the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation pursuant to Article 5. (2) None of the provisions contained in this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the exercise of any of its rights, powers, duties, or authorities unless funded, given security and indemnified as aforesaid. SECTION 8.7 ACTION OF BENEFICIARIES No Beneficiary shall have the right to institute any action, suit or proceeding or to exercise any other remedy authorized by this Agreement for the purpose of enforcing any of its rights or for the execution of any trust or power hereunder unless the Beneficiary has requested the Trustee to take or institute such action, suit or proceeding and furnished the Trustee with the funding, security or indemnity referred to in Section 8.6 and the Trustee shall have failed to act within a reasonable time thereafter. In such case, but not otherwise, the Beneficiary shall be entitled to take proceedings in any court of competent jurisdiction such as the Trustee might have taken; it being understood and intended that no one or more Beneficiaries shall have any right in any manner whatsoever to affect, disturb or prejudice the rights hereby created by any such action, or to enforce any right hereunder or the Voting Rights, the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation except subject to the conditions and in the manner herein provided, and that all powers and trusts hereunder shall be exercised and all proceedings at law shall be instituted, had and maintained by the Trustee, except only as herein provided, and in any event for the equal benefit of all Beneficiaries. SECTION 8.8 RELIANCE UPON DECLARATIONS The Trustee shall not be considered to be in contravention of any of its rights, powers, duties and authorities hereunder if, when required, it acts and relies in good faith upon statutory declarations, certificates, opinions or reports furnished pursuant to the provisions hereof or required by the Trustee to be furnished to it in the exercise of its rights, powers, duties and authorities hereunder if such statutory declarations, certificates, opinions or reports comply with the provisions of Section 8.9, if applicable, and with any other applicable provisions of this Agreement. 26 -26- SECTION 8.9 EVIDENCE AND AUTHORITY TO TRUSTEE (1) AMVESCAP and/or Exchangeco shall furnish to the Trustee evidence of compliance with the conditions provided for in this Agreement relating to any action or step required or permitted to be taken by AMVESCAP and/or Exchangeco or the Trustee under this Agreement or as a result of any obligation imposed under this Agreement, including, without limitation, in respect of the Voting Rights or the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation and the taking of any other action to be taken by the Trustee at the request of or on the application of AMVESCAP and/or Exchangeco promptly if and when: (a) such evidence is required by any other section of this Agreement to be furnished to the Trustee in accordance with the terms of this Section 8.9; or (b) the Trustee, in the exercise of its rights, powers, duties and authorities under this Agreement, gives AMVESCAP and/or Exchangeco written notice requiring it to furnish such evidence in relation to any particular action or obligation specified in such notice. (2) Such evidence shall consist of an Officer's Certificate of AMVESCAP and/or Exchangeco or a statutory declaration or a certificate made by persons entitled to sign an Officer's Certificate stating that any such condition has been complied with in accordance with the terms of this Agreement. (3) Whenever such evidence relates to a matter other than the Voting Rights or the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation or the taking of any other action to be taken by the Trustee at the request or on the application of AMVESCAP and/or Exchangeco, and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert or any other person whose qualifications give authority to a statement made by him, provided that if such report or opinion is furnished by a director, officer or employee of AMVESCAP and/or Exchangeco it shall be in the form of an Officer's Certificate or a statutory declaration. (4) Each statutory declaration, Officer's Certificate, opinion or report furnished to the Trustee as evidence of compliance with a condition provided for in this Agreement shall include a statement by the person giving the evidence: (a) declaring that he has read and understands the provisions of this Agreement relating to the condition in question; 27 -27- (b) describing the nature and scope of the examination or investigation upon which he based the statutory declaration, certificate, statement or opinion; and (c) declaring that he has made such examination or investigation as he believes is necessary to enable him to make the statements or give the opinions contained or expressed therein. SECTION 8.10 EXPERTS, ADVISERS AND AGENTS The Trustee may: (a) in relation to these presents act and rely on the opinion or advice of or information obtained from any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert, whether retained by the Trustee or by AMVESCAP and/or Exchangeco or otherwise, and may retain or employ such assistants as may be necessary to the proper discharge of its powers and duties and determination of its rights hereunder and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid; (b) employ such agents and other assistants as it may reasonably require for the proper determination and discharge of its powers and duties hereunder; and (c) pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the Trust. SECTION 8.11 INVESTMENT OF MONEYS HELD BY TRUSTEE Unless otherwise provided in this Agreement, any moneys held by or on behalf of the Trustee which under the terms of this Agreement may or ought to be invested or which may be on deposit with the Trustee or which may be in the hands of the Trustee shall, upon the receipt by the Trustee of the written direction of Exchangeco, be invested or reinvested in the name or under the control of the Trustee in securities in which, under the laws of the Province of Ontario, trustees are authorized to invest trust moneys, provided that such securities are stated to mature within two years after their purchase by the Trustee, or in Authorized Investments. Any direction of Exchangeco to the Trustee as to investment or reinvestment of funds shall be in writing and shall be provided to the Trustee no later than 9:00 a.m. (local time) or if received on a non-Business Day, shall be deemed to have been given prior to 9:00 a.m. (local time) on the immediately following Business Day. If 28 -28- no such direction is received, the Trustee shall not have any obligation to invest the monies and pending receipt of such a direction all interest or other income and such moneys may be deposited in the name of the Trustee in any chartered bank in Canada or, with the consent of Exchangeco, in the deposit department of the Trustee or any other specified loan or trust company authorized to accept deposits under the laws of Canada or any province thereof at the rate of interest then current on similar deposits. The Trustee shall not be held liable for any losses incurred in the investment of any funds as herein provided. SECTION 8.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY The Trustee shall not be required to give any bond or security in respect of the execution of the trusts, rights, duties, powers and authorities of this Agreement or otherwise in respect of the premises. SECTION 8.13 TRUSTEE NOT BOUND TO ACT ON REQUEST Except as in this Agreement otherwise specifically provided, the Trustee shall not be bound to act in accordance with any direction or request of AMVESCAP and/or Exchangeco or of the directors thereof until a duly authenticated copy of the instrument or resolution containing such direction or request shall have been delivered to the Trustee, and the Trustee shall be empowered to act upon any such copy purporting to be authenticated and believed by the Trustee to be genuine. SECTION 8.14 AUTHORITY TO CARRY ON BUSINESS The Trustee represents to AMVESCAP and Exchangeco that at the date of execution and delivery by it of this Agreement it is authorized to carry on the business of a trust company in each of the provinces of Canada but if, notwithstanding the provisions of this Section 8.14, it ceases to be so authorized to carry on business, the validity and enforceability of this Agreement and the Voting Rights, the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation shall not be affected in any manner whatsoever by reason only of such event but the Trustee shall, within 90 days after ceasing to be authorized to carry on the business of a trust company in any province of Canada, either become so authorized or resign in the manner and with the effect specified in Article 11. SECTION 8.15 CONFLICTING CLAIMS (1) If conflicting claims or demands are made or asserted with respect to any interest of any Beneficiary in any Exchangeable Shares, including any disagreement between the heirs, representatives, successors or assigns succeeding to all or any part of the interest of any Beneficiary in any Exchangeable Shares, resulting in conflicting claims or demands being made in connection with such interest, then the Trustee shall be entitled, in its sole discretion, to refuse to recognize or to comply with any such claims or demands. In so refusing, the Trustee may elect not to exercise any Voting 29 -29- Rights, Automatic Exchange Right or Automatic Exchange Rights on Liquidation subject to such conflicting claims or demands and, in so doing, the Trustee shall not be or become liable to any person on account of such election or its failure or refusal to comply with any such conflicting claims or demands. The Trustee shall be entitled to continue to refrain from acting and to refuse to act until: (a) the rights of all adverse claimants with respect to the Voting Rights, Automatic Exchange Right or Automatic Exchange Rights on Liquidation subject to such conflicting claims or demands have been adjudicated by a final judgment of a court of competent jurisdiction; or (b) all differences with respect to the Voting Rights, Automatic Exchange Right or Automatic Exchange Rights on Liquidation subject to such conflicting claims or demands have been conclusively settled by a valid written agreement binding on all such adverse claimants, and the Trustee shall have been furnished with an executed copy of such agreement certified to be in full force and effect. (2) If the Trustee elects to recognize any claim or comply with any demand made by any such adverse claimant, it may in its discretion require such claimant to furnish such surety bond or other security satisfactory to the Trustee as it shall deem appropriate to fully indemnify it as between all conflicting claims or demands. SECTION 8.16 ACCEPTANCE OF TRUST The Trustee hereby accepts the Trust created and provided for by and in this Agreement and agrees to perform the same upon the terms and conditions herein set forth and to hold all rights, privileges and benefits conferred hereby and by law in trust for the various persons who shall from time to time be Beneficiaries, subject to all the terms and conditions herein set forth. ARTICLE 9 COMPENSATION SECTION 9.1 FEES AND EXPENSES OF THE TRUSTEE AMVESCAP and Exchangeco jointly and severally agree to pay the Trustee reasonable compensation for all of the services rendered by it under this Agreement and will reimburse the Trustee for all reasonable expenses (including, but not limited to, taxes other than taxes based on the net income or capital of the Trustee, fees paid to legal counsel and other experts and advisors and travel expenses) and disbursements, including the cost and expense of any suit or litigation of any character and any proceedings before any governmental agency, reasonably 30 -30- incurred by the Trustee in connection with its duties under this Agreement; provided that AMVESCAP and Exchangeco shall have no obligation to reimburse the Trustee for any expenses or disbursements paid, incurred or suffered by the Trustee in any suit or litigation or any such proceedings in which the Trustee is determined to have acted in bad faith or with fraud, negligence, recklessness or wilful misconduct. ARTICLE 10 INDEMNIFICATION AND LIMITATION OF LIABILITY SECTION 10.1 INDEMNIFICATION OF THE TRUSTEE (1) AMVESCAP and Exchangeco jointly and severally agree to indemnify and hold harmless the Trustee and each of its directors, officers, employees and agents appointed and acting in accordance with this Agreement (collectively, the "INDEMNIFIED PARTIES") against all claims, losses, damages, reasonable costs, penalties, fines and reasonable expenses (including reasonable expenses of the Trustee's legal counsel) which, without fraud, negligence, recklessness, wilful misconduct or bad faith on the part of such Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by reason or as a result of the Trustee's acceptance or administration of the Trust, its compliance with its duties set forth in this Agreement, or any written or oral instruction delivered to the Trustee by AMVESCAP or Exchangeco pursuant hereto. (2) In no case shall AMVESCAP or Exchangeco be liable under this indemnity for any claim against any of the Indemnified Parties unless AMVESCAP and Exchangeco shall be notified by the Trustee of the written assertion of a claim or of any action commenced against the Indemnified Parties, promptly after any of the Indemnified Parties shall have received any such written assertion of a claim or shall have been served with a summons or other first legal process giving information as to the nature and basis of the claim. Subject to (ii) below, AMVESCAP and Exchangeco shall be entitled to participate at their own expense in the defence and, if AMVESCAP and Exchangeco so elect at any time after receipt of such notice, either of them may assume the defence of any suit brought to enforce any such claim. The Trustee shall have the right to employ separate counsel in any such suit and participate in the defence thereof, but the fees and expenses of such counsel shall be at the expense of the Trustee unless: (i) the employment of such counsel has been authorized by AMVESCAP or Exchangeco; or (ii) the named parties to any such suit include both the Trustee and AMVESCAP or Exchangeco and the Trustee shall have been advised by counsel acceptable to AMVESCAP or Exchangeco that there may be one or more legal defences available to the Trustee that are different from or in addition to those available to AMVESCAP or Exchangeco and that, in the judgment of such counsel, would 31 -31- present a conflict of interest were a joint representation to be undertaken (in which case AMVESCAP and Exchangeco shall not have the right to assume the defence of such suit on behalf of the Trustee but shall be liable to pay the reasonable fees and expenses of counsel for the Trustee). This indemnity shall survive the termination of the Trust and the resignation or removal of the Trustee. SECTION 10.2 LIMITATION OF LIABILITY The Trustee shall not be held liable for any loss which may occur by reason of depreciation of the value of any part of the Trust Estate or any loss incurred on any investment of funds pursuant to this Agreement, except to the extent that such loss is attributable to the fraud, negligence, recklessness, wilful misconduct or bad faith on the part of the Trustee. ARTICLE 11 CHANGE OF TRUSTEE SECTION 11.1 RESIGNATION The Trustee, or any trustee hereafter appointed, may at any time resign by giving written notice of such resignation to AMVESCAP and Exchangeco specifying the date on which it desires to resign, provided that such notice shall not be given less than thirty (30) days before such desired resignation date unless AMVESCAP and Exchangeco otherwise agree and provided further that such resignation shall not take effect until the date of the appointment of a successor trustee and the acceptance of such appointment by the successor trustee. Upon receiving such notice of resignation, AMVESCAP and Exchangeco shall promptly appoint a successor trustee, which shall be a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all provinces of Canada, by written instrument in duplicate, one copy of which shall be delivered to the resigning trustee and one copy to the successor trustee. Failing the appointment and acceptance of a successor trustee, a successor trustee may be appointed by order of a court of competent jurisdiction upon application of one or more of the parties to this Agreement. If the retiring trustee is the party initiating an application for the appointment of a successor trustee by order of a court of competent jurisdiction, AMVESCAP and Exchangeco shall be jointly and severally liable to reimburse the retiring trustee for its legal costs and expenses in connection with same. SECTION 11.2 REMOVAL The Trustee, or any trustee hereafter appointed, may (provided a successor trustee is appointed) be removed at any time on not less than 30 days' prior notice by written instrument executed by AMVESCAP and Exchangeco, in duplicate, one 32 -32- copy of which shall be delivered to the trustee so removed and one copy to the successor trustee. SECTION 11.3 SUCCESSOR TRUSTEE Any successor trustee appointed as provided under this Agreement shall execute, acknowledge and deliver to AMVESCAP and Exchangeco and to its predecessor trustee an instrument accepting such appointment. Thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor under this Agreement, with the like effect as if originally named as trustee in this Agreement. However, on the written request of AMVESCAP and Exchangeco or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due to it pursuant to the provisions of this Agreement, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon the request of any such successor trustee, AMVESCAP, Exchangeco and such predecessor trustee shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. SECTION 11.4 NOTICE OF SUCCESSOR TRUSTEE Upon acceptance of appointment by a successor trustee as provided herein, AMVESCAP and Exchangeco shall cause to be mailed notice of the succession of such trustee hereunder to each Beneficiary specified in a List. If AMVESCAP or Exchangeco shall fail to cause such notice to be mailed within 10 days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of AMVESCAP and Exchangeco. ARTICLE 12 AMVESCAP SUCCESSORS SECTION 12.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. As long as any outstanding Exchangeable Shares are owned by any person other than AMVESCAP or any of its Affiliates, AMVESCAP shall not consummate any transaction (whether by way of reconstruction, reorganization, consolidation, arrangement, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other person or, in the case of a merger, of the continuing corporation resulting therefrom unless, but may do so if: (a) such other person or continuing corporation (the "AMVESCAP SUCCESSOR"), by operation of law, becomes, without more, bound by 33 -33- the terms and provisions of this Agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, a trust agreement supplemental hereto and such other instruments (if any) as are satisfactory to the Trustee, acting reasonably, and in the opinion of legal counsel to the Trustee are reasonably necessary or advisable to evidence the assumption by the AMVESCAP Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such AMVESCAP Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of AMVESCAP under this Agreement; and (b) such transaction shall, to the satisfaction of the Trustee, acting reasonably, and in the opinion of legal counsel to the Trustee, be upon such terms and conditions as substantially to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the Trustee or of the Beneficiaries hereunder. SECTION 12.2 VESTING OF POWERS IN SUCCESSOR Whenever the conditions of Section 12.1 have been duly observed and performed, the Trustee, AMVESCAP Successor and Exchangeco shall, if required by Section 12.1, execute and deliver the supplemental trust agreement provided for in Article 13 and thereupon AMVESCAP Successor shall possess and from time to time may exercise each and every right and power of AMVESCAP under this Agreement in the name of AMVESCAP or otherwise and any act or proceeding by any provision of this Agreement required to be done or performed by the board of directors of AMVESCAP or any officers of AMVESCAP may be done and performed with like force and effect by the directors or officers of such AMVESCAP Successor. SECTION 12.3 WHOLLY-OWNED SUBSIDIARIES Nothing herein shall be construed as preventing (i) the amalgamation or merger of any wholly-owned direct or indirect subsidiary of AMVESCAP with or into AMVESCAP, (ii) the winding-up, liquidation or dissolution of any wholly-owned direct or indirect subsidiary of AMVESCAP (other than Exchangeco or Callco), provided that all of the assets of such subsidiary are transferred to AMVESCAP or another wholly-owned direct or indirect subsidiary of AMVESCAP, or (iii) any other distribution of the assets of any wholly-owned direct or indirect subsidiary of AMVESCAP (other than Exchangeco or Callco) among the shareholders of such subsidiary for the purpose of winding up its affairs, and any such transactions are expressly permitted by this Article 12. 34 -34- ARTICLE 13 AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS SECTION 13.1 AMENDMENTS, MODIFICATIONS, ETC. Subject to Sections 13.2, 13.4 and 15.1, this Agreement may not be amended or modified except by an agreement in writing executed by AMVESCAP, Exchangeco and the Trustee and approved by the Beneficiaries in accordance with section 10(2) of the Share Provisions. SECTION 13.2 MINISTERIAL AMENDMENTS Notwithstanding the provisions of Section 13.1, the parties to this Agreement may in writing, at any time and from time to time, without the approval of the Beneficiaries, amend or modify this Agreement for the purposes of: (a) adding to the covenants of any or all parties hereto for the protection of the Beneficiaries hereunder provided that the board of directors of each of Exchangeco and AMVESCAP shall be of the good faith opinion that such additions will not be prejudicial to the rights or interests of the Beneficiaries; (b) making such amendments or modifications not inconsistent with this Agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the board of directors of each of AMVESCAP and Exchangeco and in the opinion of the Trustee, having in mind the best interests of the Beneficiaries, it may be expedient to make, provided that such boards of directors and the Trustee, acting on the advice of counsel, shall be of the opinion that such amendments and modifications will not be prejudicial to the interests of the Beneficiaries; or (c) making such changes or corrections which, on the advice of counsel to AMVESCAP, Exchangeco and the Trustee, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that the Trustee, acting on the advice of counsel, and the board of directors of each of AMVESCAP and Exchangeco shall be of the opinion that such changes or corrections will not be prejudicial to the rights and interests of the Beneficiaries. SECTION 13.3 MEETING TO CONSIDER AMENDMENTS Exchangeco, at the request of AMVESCAP, shall call a meeting or meetings of the Beneficiaries for the purpose of considering any proposed amendment or modification requiring approval pursuant hereto. Any such meeting or meetings 35 -35- shall be called and held in accordance with the by-laws of Exchangeco, the Share Provisions and all applicable laws. SECTION 13.4 CHANGES IN CAPITAL OF AMVESCAP AND EXCHANGECO At all times after the occurrence of any event contemplated pursuant to section 2.7 or 2.8 of the Support Agreement or otherwise, as a result of which either AMVESCAP Ordinary Shares or the Exchangeable Shares or both are in any way changed, this Agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis, to all new securities into which AMVESCAP Ordinary Shares or the Exchangeable Shares or both are so changed and the parties hereto shall execute and deliver a supplemental trust agreement giving effect to and evidencing such necessary amendments and modifications. SECTION 13.5 EXECUTION OF SUPPLEMENTAL TRUST AGREEMENTS From time to time Exchangeco (when authorized by a resolution of its Board of Directors), AMVESCAP (when authorized by a resolution of its board of directors) and the Trustee may, subject to the provisions of these presents, and they shall, when so directed by these presents, execute and deliver by their proper officers, trust agreements or other instruments supplemental hereto, which thereafter shall form part hereof, for any one or more of the following purposes: (a) evidencing the succession of AMVESCAP Successors and the covenants of and obligations assumed by each such AMVESCAP Successor in accordance with the provisions of Article 11 and the successors of the Trustee or any successor trustee in accordance with the provisions of Article 11; (b) making any additions to, deletions from or alterations of the provisions of this Agreement or the Voting Rights, the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation which, in the opinion of the Trustee, will not be prejudicial to the interests of the Beneficiaries or are, in the opinion of counsel to the Trustee, necessary or advisable in order to incorporate, reflect or comply with any legislation the provisions of which apply to AMVESCAP, Exchangeco, the Trustee or this Agreement; and (c) for any other purposes not inconsistent with the provisions of this Agreement, including without limitation, to make or evidence any amendment or modification to this Agreement as contemplated hereby, provided that, in the opinion of the Trustee, the rights of the Trustee and Beneficiaries will not be prejudiced thereby. 36 -36- ARTICLE 14 TERMINATION SECTION 14.1 TERM The Trust created by this Agreement shall continue until the earliest to occur of the following events: (a) no outstanding Exchangeable Shares are held by a Beneficiary and no Debentures are outstanding; (b) each of AMVESCAP and Exchangeco elects in writing to terminate the Trust and such termination is approved by the Beneficiaries in accordance with section 10(2) of the Share Provisions; and (c) 21 years after the death of the last survivor of the descendants of His Majesty King George VI of Canada and the United Kingdom of Great Britain and Northern Ireland living on the date of the creation of the Trust. SECTION 14.2 SURVIVAL OF AGREEMENT This Agreement shall survive any termination of the Trust and shall continue until there are no Exchangeable Shares outstanding held by a Beneficiary and no Debentures outstanding; provided, however, that the provisions of Articles 9 and 10 shall survive any such termination of this Agreement. ARTICLE 15 GENERAL SECTION 15.1 SEVERABILITY If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. 37 -37- SECTION 15.2 ENUREMENT This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns and, subject to the terms hereof, to the benefit of the Beneficiaries. SECTION 15.3 NOTICES TO PARTIES (1) All notices and other communications between the parties hereunder shall be in writing and shall be deemed to have been given if delivered personally or by confirmed telecopy to the parties at the following addresses (or at such other address for such party as shall be specified in like notice): (a) To AMVESCAP or Exchangeco at: c/o AMVESCAP PLC 11 Devonshire Square London, England EC2M 4Y2 Attention: Corporate Secretary Facsimile: 011-44-207-929-5889 (b) To the Trustee at: CIBC Mellon Trust Company 320 Bay Street 6th Floor, P.O. Box 1 Toronto, Ontario, Canada M5H 4A6 Attention: Assistant Vice President, Client Relations Facsimile: (416) 643-5570 (2) Any notice or other communication given personally shall be deemed to have been given and received upon delivery thereof and if given by telecopy shall be deemed to have been given and received on the date of receipt thereof unless such day is not a Business Day, in which case it shall be deemed to have been given and received upon the immediately following Business Day. 38 -38- SECTION 15.4 NOTICE TO BENEFICIARIES Any and all notices to be given and any documents to be sent to any Beneficiaries may be given or sent to the address of such Beneficiary shown on the register of holders of Exchangeable Shares in any manner permitted by the by-laws of Exchangeco from time to time in force in respect of notices to shareholders and shall be deemed to be received (if given or sent in such manner) at the time specified in such by-laws, the provisions of which by-laws shall apply mutatis mutandis to notices or documents as aforesaid sent to such Beneficiaries. SECTION 15.5 COUNTERPARTS This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. SECTION 15.6 JURISDICTION This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. SECTION 15.7 ATTORNMENT Each of the Trustee, AMVESCAP and Exchangeco agrees that any action or proceeding arising out of or relating to this Agreement may be instituted in the courts of Ontario, waives any objection which it may have now or hereafter to the venue of any such action or proceeding, irrevocably submits to the jurisdiction of the said courts in any such action or proceeding, agrees to be bound by any judgment of the said courts and not to seek, and hereby waives, any review of the merits of any such judgment by the courts of any other jurisdiction, and AMVESCAP hereby appoints Exchangeco at its registered office in the Province of Ontario as attorney for service of process. IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed as of the date first above written. AMVESCAP PLC By: /s/ ROBERT F. MCCULLOUGH ------------------------------------ Authorized Signing Officer AMVESCAP INC. By: /s/ [ILLEGIBLE] ------------------------------------ Authorized Signing Officer 39 -39- CIBC MELLON TRUST COMPANY, as Trustee and in its capacity as trustee under the Indenture By: /s/ MAXINE MCDONALD --------------------------------------- Name: Maxine McDonald Title: Senior Manager, Client Relations By: /s/ J. CARRABS --------------------------------------- Name: Jeffery Carrabs Title: Manager, Client Relations 40 SCHEDULE "A" FORM OF CERTIFICATE OF ENTITLEMENT - -------------------------------------------------------------------------------- CERTIFICATE OF ENTITLEMENT This Certificate is one of the duly authorized certificates of the Corporation designated as its Certificates of Entitlement (the "CERTIFICATES") issued in accordance with the Voting and Exchange Trust Agreement between AMVESCAP INC. (the "CORPORATION"), AMVESCAP PLC and the Trustee designated thereunder concurrently with the issuance of AMVESCAP Equity Subordinated Debentures (the "DEBENTURES") of the Corporation. This Certificate and the attached Debenture(s) may be transferred and surrendered only together. The Voting and Exchange Trust Agreement provides that upon presentation of this Certificate together with the surrender of the attached Debenture(s), the holder of this Certificate shall be entitled to become, for all purposes, a "Beneficiary" under the terms of the Voting and Exchange Trust Agreement to the extent that the holder becomes the registered holder of any Exchangeable Shares in connection with the surrender of the attached Debenture(s). A copy of the Voting and Exchange Trust Agreement is on file at the registered office of the Corporation in Halifax, Nova Scotia. BY WITNESS WHEREOF, the Corporation has caused this instrument to be duly executed. AMVESCAP INC. By: By: --------------------------- ---------------------------- PRESIDENT SECRETARY - -------------------------------------------------------------------------------- EX-4.26 15 h86436ex4-26.txt INDENTURE - AMVESCAP INC. 1 EXHIBIT 4.26 AMVESCAP INC. as Corporation and CIBC MELLON TRUST COMPANY as Trustee and AMVESCAP PLC as Guarantor - -------------------------------------------------------------------------------- INDENTURE AMVESCAP EQUITY SUBORDINATED DEBENTURES August 1, 2000 - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS ARTICLE 1 INTERPRETATION Section 1.1 Definitions............................................................................1 Section 1.2 Meaning of "outstanding" for Certain Purposes..........................................8 Section 1.3 Acts of Holders........................................................................8 Section 1.4 Interpretation not Affected by Headings, etc..........................................10 Section 1.5 Applicable Law........................................................................10 Section 1.6 Invalidity Provisions.................................................................10 Section 1.7 Language..............................................................................10 Section 1.8 Successors and Assigns................................................................10 Section 1.9 Benefits of Indenture.................................................................10 ARTICLE 2 THE DEBENTURES Section 2.1 Limit of Issue and Designation of Debentures..........................................11 Section 2.2 Form and Terms of Debentures..........................................................11 Section 2.3 Interest..............................................................................11 Section 2.4 Prescription..........................................................................12 Section 2.5 Issue of Debentures...................................................................12 Section 2.6 Concerning Interest...................................................................13 Section 2.7 Execution of Debentures...............................................................13 Section 2.8 Certification by the Trustee..........................................................13 Section 2.9 Registration of Debentures............................................................14 Section 2.10 Person Entitled to Payment............................................................15 Section 2.11 Replacement of Debentures.............................................................16 Section 2.12 Exchange of Debentures................................................................16 Section 2.13 Register Open for Inspection..........................................................17 Section 2.14 Payment of Interest and Principal.....................................................17 Section 2.15 Rank and Subordination................................................................17 Section 2.16 Notice to Debentureholders............................................................18 Section 2.17 Notice to the Trustee.................................................................18 Section 2.18 Notice to the Corporation and to the Guarantor........................................19 Section 2.19 Change in Address.....................................................................19 Section 2.20 Mail Service Interruption.............................................................19 ARTICLE 3 REDEMPTION, PURCHASE AND CANCELLATION Section 3.1 Redemption of Debentures..............................................................19 Section 3.2 Places of Payment.....................................................................20
3 Section 3.3 Notice of Redemption..................................................................20 Section 3.4 Debentures Due on Redemption Date.....................................................20 Section 3.5 Deposit of Redemption Monies..........................................................21 Section 3.6 Right to Repay Redemption Amount in Exchangeable Shares...............................21 Section 3.7 Failure to Surrender Debentures Called for Redemption.................................23 Section 3.8 Purchase of Debentures................................................................24 Section 3.9 Cancellation of Purchased Debentures..................................................24 ARTICLE 4 CONVERSION AND SHARE REPAYMENT RIGHT Section 4.1 Conversion Right......................................................................24 Section 4.2 Right to Pay Conversion Value in Cash in Lieu of Conversion...........................26 Section 4.3 Right to Repay Principal Amount in Exchangeable Shares on Maturity...................27 Section 4.4 Completion of Conversion..............................................................30 Section 4.5 Fractional Shares.....................................................................31 Section 4.6 Relating to the Issue of Exchangeable Shares..........................................31 Section 4.7 Taxes and Charges on the Issue of Exchangeable Shares.................................32 ARTICLE 5 ADJUSTMENTS Section 5.1 Adjustment Upon Subdivision or Consolidation..........................................32 Section 5.2 Reorganization Event..................................................................32 Section 5.3 Adjustments as a Result of Certain Distributions and Extraordinary Cash Dividends.....33 Section 5.4 Discretionary Adjustment..............................................................34 Section 5.5 Changes Affecting Exchangeable Shares.................................................34 Section 5.6 Rules Applicable to Adjustments.......................................................35 Section 5.7 Notice of Special Events..............................................................35 ARTICLE 6 SUBORDINATION OF DEBENTURES Section 6.1 Agreement to Subordinate..............................................................36 Section 6.2 Distribution on Insolvency or Winding-up..............................................36 Section 6.3 Subrogation of Debentures.............................................................38 Section 6.4 No Payment to Debentureholders if Event of Default under the Senior Liabilities.......38 Section 6.5 Authorization of Debentureholders to Trustee to Effect Subordination..................39 Section 6.6 Knowledge of Trustee..................................................................39 Section 6.7 Trustee May Hold Senior Liabilities...................................................40 Section 6.8 Rights of Holders of Senior Liabilities Not Impaired..................................40
4 Section 6.9 Altering the Senior Liabilities.......................................................40 Section 6.10 Additional Indebtedness...............................................................40 Section 6.11 Right of Debentureholder to Convert Not Impaired......................................40 ARTICLE 7 GUARANTEE OF AMVESCAP Section 7.1 Guarantee for Benefit of All Debentureholders.........................................40 Section 7.2 Guarantee of Principal, Interest and Other Amounts....................................41 Section 7.3 The Guarantor's Liability on Discharge of the Corporation.............................41 Section 7.4 Liability of the Guarantor............................................................42 Section 7.5 Subrogation...........................................................................43 Section 7.6 Waiver................................................................................44 Section 7.7 Waiver of Default.....................................................................44 Section 7.8 Acknowledgement.......................................................................44 Section 7.9 Notice to Guarantor...................................................................44 Section 7.10 No Set-Off Rights.....................................................................44 ARTICLE 8 COVENANTS OF THE CORPORATION AND THE GUARANTOR Section 8.1 Covenants of the Corporation..........................................................44 Section 8.2 Trustee to Give Notice of Event of Default............................................46 Section 8.3 Performance of Covenants by Trustee...................................................46 Section 8.4 Covenant of the Guarantor.............................................................46 ARTICLE 9 DEFAULT AND ENFORCEMENT Section 9.1 Events of Default.....................................................................47 Section 9.2 Waiver................................................................................48 Section 9.3 Waiver of Default or Breach...........................................................49 Section 9.4 Other Remedies........................................................................49 Section 9.5 Application of Money Collected........................................................49 Section 9.6 Control by Holders....................................................................50 Section 9.7 Limitation on Suits...................................................................50 Section 9.8 Rights of Holders To Receive Payment..................................................51 Section 9.9 Collection Suit by Trustee............................................................51 Section 9.10 Trustee May File Proofs of Claim......................................................51 Section 9.11 Undertaking for Costs.................................................................51 Section 9.12 Delay or Omission Not Waiver..........................................................52 Section 9.13 Remedies Cumulative...................................................................52 Section 9.14 Judgment Against the Corporation and/or the Guarantor.................................52 Section 9.15 Distribution of Proceeds..............................................................52 Section 9.16 Immunity of Shareholders, etc.........................................................53 Section 9.17 Trustee Appointed Attorney............................................................53
5 ARTICLE 10 SATISFACTION AND DISCHARGE Section 10.1 Cancellation and Destruction..........................................................53 Section 10.2 Non-Presentation of Debentures........................................................54 Section 10.3 Repayment of Unclaimed Moneys or Exchangeable Shares to Corporation...................54 Section 10.4 Release from Covenants................................................................54 ARTICLE 11 MERGER, AMALGAMATION, CONSOLIDATION, CONVEYANCE, TRANSFER OR LEASE Section 11.1 Amalgamation and Consolidation of Corporation and Conveyances Permitted Subject to Certain Conditions....................................................................55 Section 11.2 Officers' Certificate and Opinion of Counsel..........................................55 Section 11.3 Vesting of Powers in Successor........................................................56 Section 11.4 Execution of Supplemental Indenture...................................................56 ARTICLE 12 MEETINGS OF DEBENTUREHOLDERS Section 12.1 Purposes for Which Meetings May be Called.............................................56 Section 12.2 Call, Notice and Place of Meetings....................................................56 Section 12.3 Persons Entitled to Vote at Meetings..................................................57 Section 12.4 Quorum; Action........................................................................57 Section 12.5 Determination of Voting Rights; Chairman; Conduct and Adjournment of Meetings.........58 Section 12.6 Counting Votes and Recording Action of Meetings.......................................58 ARTICLE 13 SUPPLEMENTAL INDENTURES Section 13.1 Supplemental Indentures Without Consent of Holders....................................59 Section 13.2 Supplemental Indentures with Consent of Holders.......................................60 Section 13.3 Execution of Supplemental Indentures..................................................61 Section 13.4 Effect of Supplemental Indentures.....................................................62 ARTICLE 14 CONCERNING THE TRUSTEE Section 14.1 Duties of Trustee.....................................................................62 Section 14.2 Rights of Trustee.....................................................................63 Section 14.3 Documents, Moneys, etc., Held by Trustee..............................................65 Section 14.4 Individual Rights of Trustee..........................................................66
6 Section 14.5 Trustee's Disclaimer..................................................................66 Section 14.6 Discretion of Trustee.................................................................66 Section 14.7 Compensation and Indemnity............................................................67 Section 14.8 Replacement of Trustee................................................................68 Section 14.9 Successor Trustee by Merger, etc......................................................69 Section 14.10 Eligibility; Disqualification.........................................................69 Section 14.11 Acceptance of Trust...................................................................69 Section 14.12 Additional Evidence...................................................................69 Section 14.13 Deposit of Debentures.................................................................70
7 -1- INDENTURE This Indenture dated August 1, 2000, among AMVESCAP INC. (the "CORPORATION"), CIBC MELLON TRUST COMPANY (the "TRUSTEE") and AMVESCAP PLC (the "GUARANTOR"). RECITALS: (a) The Corporation is a wholly-owned subsidiary of the Guarantor and has authorized the execution and delivery of this Indenture to provide for the creation and issuance of the Debentures to be issued under this Indenture and the allotment and issue of the Exchangeable Shares that may be issued upon conversion, redemption or maturity of the Debentures as herein provided; (b) All corporate proceedings necessary to make this Indenture a valid agreement of the Corporation and the Guarantor have been done; and (c) The foregoing recitals are made as representations and statements of fact by the Corporation and the Guarantor and not by the Trustee. In consideration of the foregoing and the mutual agreements contained herein (the receipt and adequacy of which are acknowledged), the parties agree as follows: ARTICLE 1 INTERPRETATION SECTION 1.1 DEFINITIONS. (1) In this Indenture and in the Debentures, unless there is something in the subject matter or context inconsistent therewith or unless otherwise expressly provided: "ACT" when used with respect to any Debentureholder has the meaning specified in Section 1.3(1). "AFFILIATE" has the meaning attributed thereto in the Securities Act (Ontario), as amended. "AMVESCAP ORDINARY SHARES" means the ordinary shares in the capital of the Guarantor. "AMVESCAP SHARE RATE" means 41.3286328902, subject to adjustment from time to time pursuant to Article 5. "AMVESCAP SHARE VALUE" means, as at any date, the amount equal to the AMVESCAP Share Rate multiplied by the Current Market Price as at such date. 8 -2- "APPLICABLE SECURITIES LEGISLATION" means applicable securities laws in each of the Provinces of Canada. "AUTHORIZED INVESTMENTS" has the meaning attributed thereto in Section 14.3. "BOARD RESOLUTION" means a copy of a resolution certified by an officer of the Corporation to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification. "BUSINESS DAY" means any day on which commercial banks are generally open for business in Toronto, Ontario and London, England, other than a Saturday, a Sunday or a day observed as a holiday in Toronto, Ontario or in London, England under applicable laws. "CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a currency other than Canadian dollars (the "FOREIGN CURRENCY AMOUNT") at any date the product obtained by multiplying: (a) the Foreign Currency Amount; by (b) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the board of directors of the Guarantor to be appropriate for such purpose. "CAPITAL REORGANIZATION" has the meaning attributed thereto in Section 5.5. "CONVERSION DATE" means a date chosen by a Debentureholder pursuant to Section 4.1 for conversion of Debentures into Exchangeable Shares. "CONVERSION NOTICE" has the meaning attributed thereto in Section 4.1(2). "CONVERSION NUMBER", as of any date, means the number obtained when (i) the Conversion Value as of such date is divided by (ii) the Current Market Price as of such date. "CONVERSION VALUE", as of any date, means the lesser of the AMVESCAP Share Value as of such date and $1,200. "CORPORATION" means AMVESCAP Inc., a corporation existing under the laws of Nova Scotia, and subject to Article 11, its successors and assigns. 9 -3- "COUNSEL" means a legal counsel or firm of legal counsel retained by the Trustee or retained by the Corporation and acceptable to the Trustee. "CURRENT MARKET PRICE" means, in respect of an AMVESCAP Ordinary Share on any date, the quotient obtained by dividing (i) the aggregate of the Daily Value of Trades for each day during the period of 20 consecutive Trading Days ending not more than three Trading Days before such date; by (ii) the aggregate volume of AMVESCAP Ordinary Shares used to calculate such Daily Value of Trades. "DAILY VALUE OF TRADES" means, in respect of the AMVESCAP Ordinary Shares on any Trading Day, the Canadian Dollar Equivalent of the product of (i) the volume weighted average price of AMVESCAP Ordinary Shares on the LSE (or, if the AMVESCAP Ordinary Shares are not then listed on the LSE, on such other stock exchange or automated quotation system on which the AMVESCAP Ordinary Shares are listed or quoted, as the case may be, as may be selected by the board of directors of the Guarantor for such purpose) on such date, as determined by Bloomberg L.P. or other reputable, third party information source selected by the board of directors of the Guarantor; and (ii) the aggregate volume of AMVESCAP Ordinary Shares traded on such day on the LSE or such other stock exchange or automated quotation system; provided that any such selections by the board of directors of the Guarantor shall be conclusive and binding. "DEBENTURES" means, as of any date, the equity subordinated debentures of the Corporation issued hereunder and outstanding as of such date. "DETERMINATION DATE" means the Business Day that is three Business Days prior to the Maturity Date. "DIRECTOR" means a director of the Corporation for the time being, and "DIRECTORS" or "BOARD OF DIRECTORS" means the board of directors of the Corporation or a committee of the board of directors duly authorized to make a decision on the matter in question for the time being and reference without more to action by the Directors means action by such Directors as a board or action by a committee of the Board of Directors duly authorized to make a decision on the matter in question. "DISTRIBUTED PROPERTY" means all securities (excluding Exchangeable Shares and options, rights or warrants to purchase Exchangeable Shares) or assets (including dividends, other than cash dividends and stock dividends paid in lieu of cash dividends) distributed by way of dividend, return of capital or otherwise to registered holders of the Exchangeable Shares. "EVENT OF DEFAULT" has the meaning attributed thereto in Section 9.1. 10 -4- "EXCHANGEABLE SHARES" means the non-voting exchangeable shares in the capital of the Corporation. "EXERCISE NOTICE" has the meaning attributed thereto in Section 4.3(2). "EXTRAORDINARY CASH DIVIDEND" means in respect of the Exchangeable Shares: (a) A cash dividend on the Exchangeable Shares in respect of a particular fiscal year representing the excess, if any, of (i) the aggregate of all cash dividends declared and paid on the AMVESCAP Ordinary Shares in respect of such fiscal year over (ii) the greatest of (A) 200% of the aggregate of all cash dividends declared and paid on the AMVESCAP Ordinary Shares in respect of the year ended December 31, 1999, (B) 300% of the average of the aggregate of all cash dividends declared and paid on the AMVESCAP Ordinary Shares in respect of the immediately preceding three fiscal years, and (C) 100% of the aggregate consolidated net income of the Guarantor, before extraordinary and unusual items, for its immediately preceding fiscal year; and (b) Any cash dividend on the Exchangeable Shares which the Directors by resolution determine to be extraordinary, taking into account the amount of the dividend, the effect of the dividend on the market value of the Exchangeable Shares after payment thereof, the form of payment, the financial position of the Corporation, economic conditions, business practices and such other factors as the Directors consider to be relevant. "FREELY TRADEABLE" means, in respect of shares of any class in the capital of any corporation, shares which (a) are issuable by such corporation without the necessity of filing a prospectus or any other similar offering document (other than such prospectus or similar offering document that has already been filed) under Applicable Securities Legislation and such issue does not constitute a distribution (other than a distribution already qualified by prospectus or similar offering document) under Applicable Securities Legislation; and (b) can be transferred by the holder thereof without any restriction under Applicable Securities Legislation, such as hold periods except for restrictions on transfer by reason of the holder being a "control person" under Applicable Securities Legislation. "GOVERNMENT ENTITY" means any (i) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (ii) self-regulatory organization or stock 11 -5- exchange (including, without limitation, the LSE, the UKLA and the TSE), (iii) any subdivision, agent, commission, board, or authority of any of the foregoing, or (iv) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing. "GUARANTOR" means AMVESCAP PLC, a corporation existing under the laws of England, and subject to Article 11, its successors and assigns. "HOLDER(S)" or "DEBENTUREHOLDER(S)" means the registered holder(s) of Debentures for the time being. "INDEBTEDNESS" includes any liability for any money owing whatsoever including, without limitation, in respect of the acquisition of any assets or as a result of moneys borrowed or raised by whatever means (including, without limitation, by means of commercial paper, bankers' acceptances, letters of credit, debt instruments, bank debt or financial leases, and any liability evidenced by bonds, debentures, notes or similar instruments), the guarantee of any obligations and the obligation to indemnify. "INDENTURE", "HEREIN", "HEREBY", "HEREOF" and similar expressions mean or refer to this Indenture and any indenture, deed or instrument supplemental or ancillary hereto; and the expressions "ARTICLE", and "SECTION" followed by numbers or letters mean and refer to the specified Article or Section of this Indenture. "INTEREST PAYMENT DATE" means February 1 and August 1 in each year, the first Interest Payment Date being February 1, 2001 and the last Interest Payment Date being August 1, 2003. "LSE" means the London Stock Exchange plc or its successors. "MATURITY DATE" means August 1, 2003. "MATURITY NOTICE" has the meaning attributed thereto in Section 4.3(2). "OFFER" means a take-over bid or issuer bid to purchase AMVESCAP Ordinary Shares, or any other transaction which has a similar effect (including any amalgamation, arrangement, consolidation, merger or other transaction involving the Guarantor, as a consequence of which some or all of the AMVESCAP Ordinary Shares outstanding immediately prior to the transaction will be exchanged or transferred for or converted into cash, securities or other property of the Guarantor or another Person) provided that one of the conditions to the completion of such purchase pursuant to such take-over bid or issuer bid 12 -6- or to the completion of such other transaction is that the Debentures are redeemed. "OFFICERS' CERTIFICATE" means a written certificate signed in the name of the Corporation by any two officers of the Corporation. "OPINION OF COUNSEL" means a written opinion containing the information specified herein from legal counsel who is acceptable to the Trustee, acting reasonably. "PERSON" includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Governmental Entity, syndicate or other entity. "PLAN" means the Plan of Arrangement attached to the articles of arrangement of Trimark Financial Corporation sent to the Director under the Business Corporations Act (Ontario) on the date hereof. "QUALIFIED INSTITUTION" has the meaning attributed hereto in Section 14.3. "RECOGNIZED STOCK EXCHANGE", with respect to the Exchangeable Shares and the Debentures, means the TSE and, with respect to the AMVESCAP Ordinary Shares, means the LSE. "REDEMPTION AMOUNT" has the meaning attributed thereto in Section 3.1. "REDEMPTION DATE" has the meaning attributed thereto in Section 3.1. "REDEMPTION NOTICE" has the meaning attributed thereto in Section 3.3. "REORGANIZATION EVENT" means any of (i) any amalgamation, arrangement, consolidation or merger of the Guarantor, with or into another entity that is a corporation (other than an amalgamation, arrangement, consolidation or merger in which the Guarantor is the continuing corporation and in which the AMVESCAP Ordinary Shares outstanding immediately prior to the amalgamation, arrangement, consolidation or merger are not exchanged for cash, securities or other property of the Guarantor or another corporation); (ii) any sale, transfer, lease or conveyance to another corporation of all or substantially all of the property of the Guarantor; or (iii) any liquidation, dissolution or winding-up of the Guarantor. "SENIOR LIABILITIES" means all amounts payable (including, without limitation, principal, interest, premiums, fees and expenses) in respect of or as a result of all 13 -7- Indebtedness of each of the Corporation (other than the Debentures) and the Guarantor, whether outstanding on the date of this Indenture or thereafter created, incurred, assumed or guaranteed by the Corporation and/or the Guarantor other than Indebtedness of the Corporation or the Guarantor which at any time at the option of such corporation is convertible into or exchangeable for Exchangeable Shares or any other class of shares of such corporation or Indebtedness of the Corporation or the Guarantor which, pursuant to the terms of the instrument creating or evidencing such Indebtedness, does not rank prior in right of payment to the Debentures. "SHARE REDEMPTION RIGHT" has the meaning attributed thereto in Section 3.6(1). "SHARE REPAYMENT RIGHT" has the meaning attributed thereto in Section 4.3(1). "SUBSIDIARY" means, with respect to a specified body corporate, any body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body corporate and shall include any body corporate, partnership, joint venture or other entity over which it exercises direction or control or which is in a like relation to a subsidiary. "SUCCESSOR CORPORATION" has the meaning attributed thereto in Section 11.1. "TRADING DAY" means, with respect to a Recognized Stock Exchange or other market for securities, any day on which such exchange or market is open for trading or quotation. "TRUSTEE" means CIBC Mellon Trust Company and its successors hereunder. "TSE" means The Toronto Stock Exchange Inc. or its successors. "UKLA" means the UK Listing Authority, namely the Financial Services Authority in its capacity as the competent authority for the purposes of Part IV of the Financial Services Act, 1986 of the United Kingdom (or any successor Act). "WRITTEN ORDER" or "WRITTEN REQUEST" means a written order or request, respectively, signed in the name of the Corporation by an authorized officer of the Corporation. (2) Words importing the singular number include the plural and vice versa and words importing gender include the masculine, feminine and neuter genders. 14 -8- (3) Except as otherwise provided herein, any reference in this Indenture to any act, statute, regulation, rule, instrument, agreement or section thereof shall be deemed to be a reference to such act, statute, regulation, rule, instrument, agreement or section thereof as amended, re-enacted or replaced from time to time. (4) Any reference in this Indenture to "DOLLARS" or the sign "$" shall be deemed to be a reference to lawful money of Canada. SECTION 1.2 MEANING OF "OUTSTANDING" FOR CERTAIN PURPOSES. Every Debenture shall be deemed to be outstanding until it shall be cancelled or delivered to the Trustee for cancellation (for greater certainty, delivery of any Debentures to the Trustee for conversion, redemption or on maturity is not delivery for cancellation until the Holder of such Debentures has received all monies and/or securities it is entitled to receive in such event) or until moneys and/or securities for the payment thereof shall be set aside under Article 10, or until it shall have become void pursuant to Section 2.4, provided however, that where a new Debenture has been issued in substitution for a Debenture which has been lost, stolen or destroyed, only one of such Debentures shall be counted for all purposes, including, without limitation, the purpose of determining the aggregate principal amount of Debentures outstanding, and provided that, for the purpose of any provision of this Indenture entitling Holders of Debentures then outstanding to vote, constitute a quorum for the purpose of voting, sign consents, requisitions or other instruments or take any other action under this Indenture, Debentures owned, directly or indirectly, legally or beneficially by the Corporation or any Affiliate shall be disregarded, except that (i) for the purpose of determining whether the Trustee shall be protected in relying on any vote, constitution of a quorum, consent, requisition, instrument or other action, only those Debentures which according to an Officers' Certificate received by the Trustee are so owned shall be disregarded; and (ii) Debentures so owned which have been pledged in good faith other than to the Corporation or any Affiliate shall not be so disregarded, if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Debentures in its discretion, free from the control of the Corporation or any Affiliate. SECTION 1.3 ACTS OF HOLDERS (1) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing or, alternatively, be embodied in and evidenced by the record of Debentureholders voting in favour thereof, either in person or by proxies duly appointed in writing, at any meeting of Debentureholders duly called and held in accordance with the provisions of Article 12, or a combination of such instruments and any such record. Except as herein otherwise expressly 15 -9- provided, such action shall become effective when such requisite instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Corporation. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "ACT" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and, subject to Section 14.1, conclusive in favour of the Trustee and the Corporation, if made in the manner provided in this Section. The record of any meeting of Debentureholders shall be provided in the manner provided in Section 12.6. (2) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgements of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a signer acting in a capacity, other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any manner that the Trustee deems sufficient. (3) If the Corporation or the Trustee shall solicit from the Debentureholders any Act, the Corporation or the Trustee, as the case may be, may, at its option, fix in advance a record date for the determination of Debentureholders entitled to take such Act, but the Corporation or the Trustee, as the case may be, shall have no obligation to do so. Any such record date shall be fixed at the Corporation's or the Trustee's discretion, as the case may be. If such a record date is fixed, such Act may be sought or taken before or after the record date, but only the Debentureholders of record at the close of business (in the City of Toronto, Ontario) on such record date shall be deemed to be Debentureholders for the purpose of determining whether Holders of the requisite proportion of Debentures then outstanding have authorized or agreed or consented to such Act, and for that purpose the Debentures then outstanding shall be computed as of such record date. (4) Any Act of the Holder of a Debenture shall bind every future holder of the same Debenture and the Holder of every Debenture issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, suffered or omitted by the Trustee or the Corporation in reliance thereon, whether or not notation of such action is made upon such Debenture. 16 -10- SECTION 1.4 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this Indenture into Articles and Sections, the provision of a table of contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. SECTION 1.5 APPLICABLE LAW. (1) This Indenture and the Debentures shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. (2) The parties hereby irrevocably attorn and submit to the non-exclusive jurisdiction of the courts of Ontario with respect to any matter arising under or related to the Indenture and the Debentures. SECTION 1.6 INVALIDITY PROVISIONS. If any provision contained in this Indenture or the Debentures should be invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. SECTION 1.7 LANGUAGE. This Indenture and all matters related hereto shall be read, construed and enforced in the English language, and unless otherwise specified herein, all notices, statements of account and other documents signed or permitted to be given or entered into pursuant hereto shall be drawn up in the English language only. The parties hereto expressly request and require that this document be drawn up in English. Les parties aux presentes conviennent et exigent que cette entente et tous les documents qui s'y rattachent soient rediges en anglais. SECTION 1.8 SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Corporation and the Guarantor shall bind their respective successors and assigns, whether expressed or not. SECTION 1.9 BENEFITS OF INDENTURE. Nothing in this Indenture or in the Debentures, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any paying agent and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. 17 -11- ARTICLE 2 THE DEBENTURES SECTION 2.1 LIMIT OF ISSUE AND DESIGNATION OF DEBENTURES. The Debentures authorized to be issued hereunder shall consist of, and be limited to, an aggregate maximum principal amount of ONE BILLION, TWO HUNDRED AND SEVENTY-NINE MILLION, FIVE HUNDRED AND THIRTY THOUSAND Dollars ($1,279,530,000.00) designated as "AMVESCAP EQUITY SUBORDINATED DEBENTURES". SECTION 2.2 FORM AND TERMS OF DEBENTURES. (1) The Debentures shall be dated as of August 1, 2000, shall bear interest from and including that date at the rate of 6.00% per annum (after as well as before maturity, default and judgment, with interest on overdue interest at such rate), payable in equal semi-annual instalments in arrears in lawful money of Canada on each Interest Payment Date, and shall mature on the Maturity Date. (2) Subject to exercise of (i) the right to redeem pursuant to Article 3; (ii) the right to convert pursuant to Section 4.1 or Section 4.3; and (iii) the Share Repayment Right pursuant to Section 4.3, the principal of the Debentures will be payable on the Maturity Date in lawful money of Canada against surrender thereof by the registered Holder of the Debentures at the place at which the register is maintained pursuant to Section 2.9. (3) The Debentures shall be issued as fully registered Debentures in denominations of $1,000 and integral multiples of $1,000, shall be redeemable as provided for in Article 3 and shall be convertible as provided for in Article 4. (4) The Debentures and the certificate of the Trustee endorsed thereon shall be substantially in the form set forth in Schedule "A" hereto. (5) Subject to applicable law and the rules of the TSE, the Debentures may be printed, engraved or lithographed or may be partly in one form and partly in the other, as the Corporation may determine. SECTION 2.3 INTEREST. Each Debenture issued hereunder, whether issued originally or in exchange for another Debenture, shall bear interest daily from and including August 1, 2000 or from and including the last Interest Payment Date on which interest shall have been paid or made available for payment on the Debentures then outstanding, whichever shall be the later, to but excluding the earlier of: (a) If called for redemption, the Redemption Date; 18 -12- (b) If converted prior to Maturity Date in accordance with Section 4.1, the Conversion Date; and (c) The Maturity Date; unless such payment is improperly withheld or refused, upon due presentation and surrender thereof for payment on or after the appropriate date and prior to the setting aside of the appropriate amount pursuant to Article 10. In addition, interest shall be payable on the Conversion Value in accordance with the provisions of Section 4.4. SECTION 2.4 PRESCRIPTION. The right of the Debentureholders to exercise their rights under this Indenture shall become void unless the Debentures are presented for payment within a period of five years from the Maturity Date, after which payment thereof shall be governed by the provisions of Article 10. The Corporation shall have satisfied its obligations under a Debenture upon remittance to the Trustee for the account of the Holder thereof, either upon redemption, on the Conversion Date for such Debenture or on the Maturity Date, of any and all consideration due hereunder in respect of such Debenture in cash or by the delivery of Freely Tradeable Exchangeable Shares, subject to and in accordance with the provisions of this Indenture, and such remittance shall for all purposes be deemed a payment to such Holder, and to that extent such Debenture shall thereafter not be considered as outstanding and such Holder shall have no right, except to receive payment out of the moneys so paid and deposited or Freely Tradeable Exchangeable Shares so deposited (or, after redemption or purchase of the Exchangeable Shares pursuant to their terms or to the terms of the Plan, AMVESCAP Ordinary Shares) upon surrender of such Debenture. SECTION 2.5 ISSUE OF DEBENTURES. (1) Debentures in the aggregate maximum principal amount of ONE BILLION, TWO HUNDRED SEVENTY-NINE MILLION, FIVE HUNDRED AND THIRTY THOUSAND Dollars ($1,279,530,000.00) in lawful money of Canada shall be executed by the Corporation and, forthwith after such execution, shall be delivered to the Trustee and shall be certified by the Trustee and delivered to or to the order of the Corporation upon receipt by the Trustee of the following: (a) A Written Order for the certification and delivery of such Debentures; (b) An Opinion of Counsel (who may rely, as to all factual matters, in the absence of knowledge to the contrary, upon an Officers' Certificate and which may be subject to customary qualifications) in favour of the Trustee to the effect that: 19 -13- (i) All conditions precedent provided for herein relating to the authorization, execution, authentication and delivery of the Debentures applied for have been complied with; and (ii) The Debentures applied for have been duly and validly authorized, executed and delivered by the Corporation and, upon certification and delivery thereof by the Trustee, will be valid and legally binding obligations of the Corporation, entitled to the benefits hereof and subject to the terms hereof; and (c) An Officers' Certificate stating that all conditions precedent provided for herein relating to the authorization, issuance, execution, certification and delivery of the Debentures applied for have been complied with. (2) The Trustee, prior to the certification of the Debentures, shall not be bound to make any enquiry or investigation as to the correctness of the matters set forth in any of the opinions, certificates or other documents required by the provisions hereof. The Trustee may rely and shall be protected in acting upon any such opinions, certificates or other documents, but may in its discretion require additional evidence before acting or relying thereon. SECTION 2.6 CONCERNING INTEREST. Wherever in this Indenture there is mention in any context of the payment of interest, such mention shall be deemed to include mention of the payment of interest on amounts in default to the extent that, in such context, such interest is, was, or would be payable and express mention of interest on amounts in default in any provisions hereof shall not be construed as excluding such interest in those provisions hereof where such express mention is not made. SECTION 2.7 EXECUTION OF DEBENTURES. The Debentures shall be signed by the President of the Corporation and by the Secretary of the Corporation. The signatures of such officers may be reproduced in facsimile and Debentures bearing such facsimile signatures shall be binding upon the Corporation, as if they had been manually signed by such officers. Notwithstanding that any of the individuals whose manual or facsimile signature appears on any Debenture as one of such officers may no longer hold office at the date of this Indenture or at the date of such Debenture or at the date of certification and delivery thereof, any Debenture signed as aforesaid shall be valid and binding upon the Corporation and entitled to the benefit hereof. SECTION 2.8 CERTIFICATION BY THE TRUSTEE. (1) No Debenture shall be issued or, if issued, shall be obligatory or entitle the Holder to the benefit hereof, until it has been certified by or on behalf of the 20 -14- Trustee substantially in the form of the certificate set out in Schedule "A" hereto, or in some other form approved by the Trustee, and such certification by the Trustee upon any Debenture shall be conclusive evidence that the Debenture so certified has been duly issued hereunder and is a valid obligation of the Corporation and that the Holder is entitled to the benefit hereof. (2) The certificate of the Trustee on Debentures issued hereunder shall not be construed as a representation or warranty by the Trustee as to the validity of this Indenture or of the Debentures (except the due certification thereof) or as to the performance by the Corporation or the Guarantor of their obligations under this Indenture and the Trustee shall in no respect be liable or answerable for the use made of the Debentures or any of them or of the proceeds thereof (other than disbursement of amounts received from the Corporation in respect of the payment of interest or principal pursuant to this Indenture). SECTION 2.9 REGISTRATION OF DEBENTURES. (1) The Corporation shall cause to be kept by and at the principal office of the Trustee in the City of Toronto, Ontario a Debenture register in which shall be entered the names and latest known addresses of the Holders of Debentures and the other particulars, prescribed by law, of the Debentures held by them respectively and of all transfers of Debentures. Such name registration shall be noted on the Debentures by the Trustee or other registrar. No transfer of a Debenture shall be effective as against the Corporation unless made on the Debenture register and made by the registered Holder or its executors or administrators or other legal representatives or its or their attorney duly appointed by an instrument in writing in form and execution satisfactory to the Trustee, upon compliance with such requirements as the Trustee or other registrar may prescribe, and unless such transfer shall have been duly noted on such Debenture by the Trustee or other registrar. (2) The Holder of a Debenture may at any time and from time to time have such Debenture transferred at the place at which the register is kept pursuant to the provisions of this Section and in accordance with such reasonable regulations as the Trustee may prescribe. (3) The party requesting any transfer pursuant to this Section 2.9 shall, as a condition precedent to such transfer, reimburse the Trustee for any stamp or other security transfer tax or governmental charge required to be paid in respect of such transfer and, in addition, pay a reasonable charge for the Trustee's services for each Debenture transferred and for each Debenture issued upon such transfer. (4) Neither the Corporation nor the Trustee nor any registrar shall be required to transfer or exchange (pursuant to Section 2.12) any Debentures on any Interest 21 -15- Payment Date or Redemption Date or for a period of 15 Business Days preceding any Interest Payment Date or Redemption Date. (5) None of the Trustee or any registrar for the Debentures or the Corporation shall be charged with notice of or be bound to see to the execution of any trust, whether express, implied or constructive, in respect of any Debenture and may transfer any Debenture on the direction of the Holder thereof, whether named as trustee or otherwise, as though that Person were the beneficial owner thereof. SECTION 2.10 PERSON ENTITLED TO PAYMENT. (1) The Person in whose name any Debentures shall be registered shall be deemed the owner thereof for all purposes of this Indenture and payment of or on account of the principal and accrued interest on such Debentures shall be made only to or upon the order in writing of such Holder thereof and such payment shall be a good and sufficient discharge to the Trustee and any registrar and to the Corporation and any paying agent for the amount so paid. (2) Subject to the exercise of the Share Redemption Right pursuant to Section 3.6 or a Holder's conversion right pursuant to Section 4.1, as the interest on the Debentures becomes payable (except interest payable at maturity, conversion or on redemption which may, at the option of the Corporation, be paid upon presentation and surrender of such Debentures for payment), the Corporation, at least three (3) days prior to each Interest Payment Date, shall forward or cause to be forwarded by prepaid post (or in the event of mail service interruption by such other means as the Trustee and the Corporation shall determine to be appropriate), to the Holder of each Debenture, at its address appearing on the register referred to in Section 2.9, or in the case of joint Holders, to the one whose name appears first on such register, a cheque for such interest (less any tax required by law to be deducted) payable to the order of such Holder or Holders and negotiable at par at the City of Toronto, Ontario. The forwarding of such cheque shall satisfy and discharge the liability for the interest on the Debentures to the extent of the sums represented thereby (plus the amount of any tax deducted as aforesaid), unless such cheque be not paid on presentation; provided that, in the event of the non-receipt of such cheque by the Holder, or the loss or destruction thereof, the Corporation, upon it and the Trustee being furnished with reasonable evidence of such non-receipt, loss or destruction and indemnity reasonably satisfactory to them shall issue to such Holder a replacement cheque for the amount of such cheque. (3) The registered Holder of any Debenture shall be entitled to the principal and interest evidenced by such Debenture, free from all equities or rights of set-off, compensation or counterclaim between the Corporation and the original or any intermediate Holder thereof and all Persons may act accordingly and a transferee 22 -16- of a Debenture shall, after the appropriate form of transfer is lodged with the Trustee or other registrar and upon compliance with all other conditions in that behalf required by this Indenture or by any conditions contained in such Debenture or by law, be entitled to be entered on the Debenture register as the owner of such Debenture, free from all equities or rights of set-off, compensation or counterclaim between the Corporation and its transferor or any previous Holder thereof, save in respect of equities of which the Corporation is required to take notice by statute or by order of a court of competent jurisdiction. (4) Where Debentures are registered in more than one name, the principal and interest from time to time payable in cash in respect thereof may be paid by cheque payable to the order of all such Holders, failing written instructions from them to the contrary, and such payment shall be a valid discharge to the Trustee and any registrar and to the Corporation and any paying agent for the amount so paid. SECTION 2.11 REPLACEMENT OF DEBENTURES. (1) If any of the Debentures shall become mutilated or defaced, or be lost, stolen or destroyed, the Corporation shall issue and thereupon the Trustee shall certify and deliver a new Debenture of like date and tenor and bearing the same legends, if any, as the one mutilated, defaced, lost, stolen or destroyed in exchange for, in place of and upon cancellation of such mutilated or defaced Debenture or in lieu of and in substitution for such lost, stolen or destroyed Debenture. The new Debenture shall be entitled to the benefit hereof and shall rank equally in accordance with its terms with all other Debentures issued hereunder. (2) The applicant for the issue of a new Debenture shall bear the cost of the issue thereof and in case of loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to the Corporation and the Trustee such evidence of ownership and of the loss, destruction or theft of the Debenture so lost, destroyed or stolen as shall be satisfactory to the Corporation and the Trustee in their discretion and such applicant shall also be required to furnish indemnity in amount and form satisfactory to the Corporation and the Trustee in their discretion, and shall pay the reasonable charges of the Corporation and the Trustee in connection therewith. SECTION 2.12 EXCHANGE OF DEBENTURES. (1) Debentures in any denomination may be exchanged at any time for Debentures of the same aggregate principal amount in any other authorized denomination. Debentures may be so exchanged at the place at which the register is maintained pursuant to Section 2.9 or other convenient place of delivery by the Corporation and acceptable to the Trustee. 23 -17- (2) The Corporation shall execute and the Trustee shall certify all Debentures necessary to carry out exchanges pursuant to this Section 2.12. All Debentures surrendered for exchange shall be cancelled. (3) The party requesting any exchange pursuant to this Section 2.12 shall, as a condition precedent to such exchange, reimburse the Trustee for any stamp or other security transfer tax or governmental charge required to be paid in respect of such exchange or the related issue of Debentures and, in addition, pay a reasonable charge for the Trustee's services for each Debenture exchanged and a reasonable charge for each Debenture issued upon such exchange. (4) Notwithstanding the foregoing provisions, no charge for the Trustee's services shall be made to a Debentureholder for any exchange or transfer of any Debenture applied for within a period of 60 days from the date hereof. SECTION 2.13 REGISTER OPEN FOR INSPECTION. The Debenture register shall at all reasonable times, and at such reasonable costs as established by the Trustee or other registrar, be open for inspection by the Corporation, the Guarantor, the Trustee or any Debentureholder. The Trustee and every registrar shall from time to time when requested in writing to do so by the Corporation, the Guarantor or by the Trustee furnish the Corporation, the Guarantor or the Trustee, as the case may be, with a list of names and addresses of Holders of Debentures entered on the register kept by it and showing the principal amount and serial numbers of the Debentures held by each such Holder. SECTION 2.14 PAYMENT OF INTEREST AND PRINCIPAL. (1) Except as herein otherwise provided, all sums which may at any time become payable, whether at maturity, conversion, redemption or on a declaration of acceleration or otherwise, on account of any Debenture or any interest thereon, shall be payable at the option of the Holder at the place at which the register referred to in Section 2.9 is maintained. (2) Whenever any payment of principal or interest to be made hereunder shall be stated to be due on a day which is not a Business Day in the place in which the register referred to in Section 2.9 is maintained, then the Debentureholder shall not be entitled to payment of the amount due in such place until the next succeeding Business Day in that place and will not be entitled to interest or other payment in respect of such delay. SECTION 2.15 RANK AND SUBORDINATION. The Debentures certified and issued under this Indenture rank pari passu with one another, in accordance with their tenor without discrimination, preference or priority. The payment of all amounts owing hereunder including, without limitation, 24 -18- the principal of and interest on the Debentures is expressly subordinated to the prior payment in full of Senior Liabilities, as provided in Article 6. SECTION 2.16 NOTICE TO DEBENTUREHOLDERS. (1) All notices to be given hereunder with respect to the Debentures shall be deemed to be validly given to the Debentureholders if sent by courier or by first class mail, postage prepaid, by letter or circular addressed to such Holders at their post office addresses appearing in the register referred to in Section 2.9. Any notice so given by courier or mail shall be deemed to have been received one (1) Business Day after the day it was given to the courier or three (3) Business Days after the day of mailing. If by reason of any interruption of mail service, actual or threatened, any notice to be given to all Debentureholders would be unlikely to reach substantially all of the Debentureholders such notice may be given by publication once (twice in the case of a notice of a meeting of Debentureholders) in any daily English language newspaper of general circulation in all provinces of Canada and once in a daily French language newspaper of general circulation in the Province of Quebec. Any notice so given by publication shall be deemed to have been received on the day on which publication shall have been effected at least once in each of the newspapers in which publication was required. (2) Accidental error or omission in giving notice or accidental failure to send notice by mail or courier to any Debentureholder shall not invalidate any action or proceeding founded such notice. (3) All notices with respect to any Debenture may be given to whichever one of the Holders thereof (if more than one) is named first in the Debenture register and any notice so given shall be sufficient notice to all Holders of such Debenture. (4) In determining under any provision hereof the date when notice of any meeting or other event must be given, the date of giving the notice shall be included and the date of the meeting or other event shall be excluded. SECTION 2.17 NOTICE TO THE TRUSTEE. Any notice to the Trustee under any provision of this Indenture must be in writing and may be made or given by personal delivery, by registered mail, postage prepaid, or by transmittal by facsimile or other electronic means of communication addressed to the Trustee at 320 Bay Street, P.O. Box 1, Toronto, Ontario, Canada M5H 4A6 or facsimile (416) 643-5570, Attention: Vice President, Corporate Trust Services. Except as otherwise expressly provided herein, any notice given by personal delivery or registered mail shall be deemed to have been given and received on the day upon which it was delivered or if made or given by facsimile or other electronic means of communication before 5:00 p.m. (Toronto time), on the day of transmittal thereof, provided that if such day is not a Business Day or if such notice was made or given after 25 -19- 5:00 p.m. (Toronto time), such notice shall be deemed to have been given and received on the first Business Day after the day of transmittal thereof. SECTION 2.18 NOTICE TO THE CORPORATION AND TO THE GUARANTOR. Any notice to the Corporation or to the Guarantor under any provision of this Indenture must be in writing and may be made or given by personal delivery, by registered mail, postage prepaid, or by transmittal by facsimile or other electronic means of communication addressed to the Corporation or to the Guarantor c/o AMVESCAP PLC at 11 Devonshire Square, London, England, EC2M 2Y2, or facsimile (011) 44-207-929-5889, Attention: Corporate Secretary, with a copy to AMVESCAP Corporation at 1315 Peachtree Street, N.E., Suite 500, Atlanta, Georgia, USA 30309 or facsimile (404) 724-4280 Attention: Chief Financial Officer. Except as otherwise expressly provided herein, any notice given by personal delivery or registered mail shall be deemed to have been given and received on the day upon which it was delivered or if made or given by facsimile or other electronic means of communication before 5:00 p.m. (London, England time), on the day of transmittal thereof, provided that if such day is not a Business Day or if such notice was made or given after 5:00 p.m. (London, England time), such notice shall be deemed to have been given and received on the first Business Day after the day of transmittal thereof. SECTION 2.19 CHANGE IN ADDRESS. Each of the Corporation, the Guarantor or the Trustee may from time to time notify the other parties of a change in address or facsimile number which thereafter, until changed by like notice, shall be the address or facsimile number of that party for all purposes of this Indenture. SECTION 2.20 MAIL SERVICE INTERRUPTION. If by reason of any interruption of mail service, actual or threatened, any notice to be given to the Trustee, to the Corporation or to the Guarantor would be unlikely to reach its destination in a timely manner, such notice, if sent by mail, shall be valid and effective only when received by an officer of the party to which it is addressed. ARTICLE 3 REDEMPTION, PURCHASE AND CANCELLATION SECTION 3.1 REDEMPTION OF DEBENTURES. The Corporation shall have the right at its option to conditionally or unconditionally redeem all, but not less than all, of the Debentures outstanding hereunder at any time before the Maturity Date at a date chosen by the Corporation for redemption (the "REDEMPTION DATE") upon payment in lawful money of Canada of an amount, for each $1,000 principal amount of Debentures to be redeemed, equal to the aggregate of (i) $1,200; plus (ii) all accrued and unpaid interest on each such $1,000 26 -20- principal amount to but excluding the Redemption Date (collectively, the "REDEMPTION AMOUNT"). The Corporation may satisfy the Redemption Amount in cash or by the delivery of a number of Freely Tradeable Exchangeable Shares as provided in Section 3.6. The Corporation may only exercise its right to conditionally redeem all of the Debentures outstanding hereunder if there is an Offer and if the only condition to the Corporation's exercise of its right to redeem all of the Debentures outstanding hereunder is the completion of such Offer. SECTION 3.2 PLACES OF PAYMENT. The Redemption Amount (less any tax required by law to be deducted) will be payable upon presentation and surrender of the Debentures called for redemption at the place where the register is maintained pursuant to Section 2.9 and at any other places specified in the Redemption Notice. SECTION 3.3 NOTICE OF REDEMPTION. (1) Notice of redemption of the Debentures shall be given to Holders at least 20 days and not more than 30 days prior to the Redemption Date (the "REDEMPTION NOTICE") in the form set forth in Schedule "B" hereto and in the manner provided in Section 2.16. Every such notice shall specify the aggregate principal amount of Debentures called for redemption, the Redemption Date, the Redemption Amount and the places of payment and shall state that, subject to Section 3.4, interest upon the principal amount of Debentures called for redemption shall cease to be payable from and after the Redemption Date. Contemporaneously with the giving of such Redemption Notice, the Corporation shall issue a press release over newswire services in Canada and the United Kingdom advising Debentureholders that such a Redemption Notice has been given and containing substantially the information contained in such Redemption Notice. (2) The Corporation shall notify the Trustee in writing that the Corporation is considering redeeming the Debentures at least 5 Business Days prior to the date the Corporation may want the Trustee to send a Redemption Notice to Debentureholders. SECTION 3.4 DEBENTURES DUE ON REDEMPTION DATE. Upon a Redemption Notice being given in accordance with Section 3.3, the Redemption Amount shall be and become due and payable on the Redemption Date specified in such notice and with the same effect as if it were the Maturity Date of such Debentures and, from and after such Redemption Date, interest shall cease, unless payment of the Redemption Amount shall not be made on presentation for surrender of such Debentures at the place specified in Section 3.2 on or after the Redemption Date and prior to the setting aside of the Redemption Amount pursuant to Article 10. 27 -21- SECTION 3.5 DEPOSIT OF REDEMPTION MONIES. Upon Debentures being called for redemption as provided for in Section 3.3 hereof, but subject to Section 3.6, the Corporation shall deposit with the Trustee or any paying agent to the order of the Trustee or for the account of the Trustee, on or prior to the Redemption Date specified in the Redemption Notice, such sums as are sufficient to pay the Redemption Amount of the Debentures (less any tax required by law to be deducted). From the sums so deposited, the Trustee shall pay or cause to be paid to the Holders, upon surrender of the Debentures, the Redemption Amount thereof (less any tax required by law to be deducted). SECTION 3.6 RIGHT TO REPAY REDEMPTION AMOUNT IN EXCHANGEABLE SHARES. (1) Subject to the other provisions of this Section 3.6, the Corporation may, at its option, elect to satisfy its obligation to pay the Redemption Amount by delivering to the Trustee on the Redemption Date that number of Freely Tradeable Exchangeable Shares obtained by dividing the Redemption Amount by 95% of the Current Market Price on the date of the Redemption Notice (the "SHARE REDEMPTION RIGHT"). (2) The Corporation shall exercise the Share Redemption Right by so specifying in the Redemption Notice. (3) The Corporation's right to exercise the Share Redemption Right shall be conditional upon the following conditions being met on the fifth Business Day preceding the Redemption Date: (a) The qualification of the Exchangeable Shares to be issued on exercise of the Share Redemption Right as Freely Tradeable; (b) The listing (or the functional equivalent thereof) of such additional Exchangeable Shares on the TSE; (c) The Corporation being a reporting issuer in good standing (or its equivalent) under Applicable Securities Legislation where the distribution of such Exchangeable Shares occurs and where such legislation recognizes the status of a reporting issuer (or its equivalent); (d) No Event of Default shall have occurred and be continuing; (e) The receipt by the Trustee of an Officers' Certificate stating that conditions (a), (b), (c) and (d) above have been satisfied and setting forth the number of Exchangeable Shares to be delivered for each $1,000 principal amount of Debentures and the Current Market Price on the date of the Redemption Notice; and 28 -22- (f) The receipt by the Trustee of an Opinion of Counsel to the effect that such Exchangeable Shares have been duly authorized and, when issued and delivered pursuant to the terms of this Indenture in payment of the Redemption Amount of the Debentures outstanding, will be validly issued as fully paid and non-assessable, that conditions (a) and (b) above have been satisfied and that, relying exclusively on certificates of good standing issued by the relevant securities authorities, condition (c) above is satisfied, except that such opinion in respect of condition (c) need not be expressed with respect to those provinces where certificates of good standing are not issued by the securities authorities. If the foregoing conditions are not satisfied prior to the close of business (in the City of Toronto, Ontario) on the fifth Business Day preceding the Redemption Date, the Corporation shall pay the Redemption Amount in cash in accordance with Section 3.5 and shall issue a press release over newswire services in Canada and the United Kingdom to such effect. (4) In the event that the Corporation duly exercises its Share Redemption Right, on or before the Redemption Date, the Corporation shall deliver or cause to be delivered to the Trustee for delivery to and on account of the Holders upon presentation and surrender of the Debentures for payment on redemption at the place where the register is maintained pursuant to Section 2.9 or any other place specified in the Redemption Notice, certificates representing the Freely Tradeable Exchangeable Shares to which the Holders are entitled. (5) No fractional Exchangeable Shares shall be delivered upon the exercise of the Share Redemption Right but, in lieu thereof, the Corporation shall pay to the Trustee for the account of the Holders, at the time contemplated in Section 3.6(4), the cash equivalent thereof determined on the basis of the Current Market Price on the date of the Redemption Notice (less any tax required by law to be deducted). (6) A Holder shall be treated as the shareholder of record of the Exchangeable Shares issued on due exercise by the Corporation of the Share Redemption Right effective immediately after the close of business (in the City of Toronto, Ontario) on the Redemption Date, and shall be entitled to all substitutions therefor, all income earned thereon or accretions thereto and all dividends or distributions (including stock dividends and dividends or distributions in kind) thereon and arising thereafter, and in the event that the Trustee receives the same, it shall hold the same in trust for the benefit of such Holder. (7) The Corporation shall at all times reserve and keep available out of its authorized Exchangeable Shares (if the number thereof is or becomes limited) solely for the purpose of issue and delivery upon the exercise of the Share Redemption Right 29 -23- as provided herein, and shall issue to Debentureholders to whom Exchangeable Shares will be issued pursuant to exercise of the Share Redemption Right, such number of Exchangeable Shares as shall be issuable in such event. All Exchangeable Shares which shall be so issuable shall be duly and validly issued as fully paid and non-assessable. (8) The Corporation shall comply with all Applicable Securities Legislation regulating the Corporation and the issue and delivery of Exchangeable Shares upon exercise of the Share Redemption Right and shall cause to be listed and posted for trading (or the functional equivalent thereof) such Exchangeable Shares on the TSE. (9) The Corporation shall from time to time promptly advise the Trustee in writing of, and pay, or make provision satisfactory to the Trustee for the payment of, all taxes and charges which may be imposed by the laws of Canada or any province thereof (except income tax, capital gains tax, withholding tax or security transfer tax, if any) which shall be payable with respect to the issuance or delivery of Exchangeable Shares to Holders upon exercise of the Share Redemption Right pursuant to the terms of the Debentures and of this Indenture. (10) If the Corporation elects to satisfy its obligation to pay the Redemption Amount by delivering Exchangeable Shares in accordance with this Section 3.6 and if the Redemption Amount (or any portion thereof) to which a Holder is entitled is subject to withholding taxes, the Corporation, for the account of the Holder, shall sell, or cause to be sold, through investment banks, brokers or dealers selected by the Corporation, out of the Exchangeable Shares issued by the Corporation for this purpose, such number of Exchangeable Shares that is sufficient to yield net proceeds (after payment of all costs) to cover the amount of taxes required to be withheld, and shall remit the same, or cause same to be remitted on behalf of the Corporation, to the proper tax authorities within the period of time prescribed for this purpose under applicable laws. SECTION 3.7 FAILURE TO SURRENDER DEBENTURES CALLED FOR REDEMPTION. If the Holder of any Debentures called for redemption in accordance with Section 3.3 should, within 30 days from the Redemption Date, fail to surrender any of such Debentures or fail within such time to (i) accept cash or Exchangeable Shares, as the case may be, in satisfaction of the Redemption Amount payable in respect thereof; or (ii) give such receipt therefor, if any, as the Trustee may require, such cash or Exchangeable Shares, as the case may be, shall be set aside in trust for such Holder, in accordance with Article 10 and Section 14.3, and such setting aside shall for all purposes be deemed a payment to such Holder of the cash or Exchangeable Shares so set aside, and to that extent, such Debentures shall thereafter not be considered as outstanding hereunder and such Holder shall have no right, as of the Redemption Date, except to 30 -24- receive payment out of the cash or Exchangeable Shares so deposited (or, after redemption or purchase of the Exchangeable Shares pursuant to their terms or to the terms of the Plan, AMVESCAP Ordinary Shares), upon surrender of its Debentures, without interest thereon. SECTION 3.8 PURCHASE OF DEBENTURES. (1) Provided that no Event of Default has occurred and is continuing, the Corporation may purchase all or any of the Debentures in the open market (which shall include purchase from or through an investment dealer or a firm holding membership on a Recognized Stock Exchange) or by tender or by private contract at any price, subject to compliance with Applicable Securities Legislation regarding issuer bid requirements. (2) If, upon an invitation for tenders, more Debentures than the Corporation is prepared to accept are tendered at the same lowest price, the Debentures to be purchased by the Corporation will be selected by the Trustee in such manner (which may include pro rata, by lot or by random selection by computer) as the Trustee may deem equitable, from the Debentures tendered by each tendering Debentureholder who tendered at such lowest price. For this purpose, the Trustee may make, and from time to time amend, regulations with respect to the manner in which Debentures may be so selected and regulations so made shall be valid and binding upon all Debentureholders and, notwithstanding the fact that, as a result thereof, one or more of such Debentures become subject to purchase in part only. The Holder of any Debenture of which a part only is purchased, upon surrender of such Debenture for payment, shall be entitled to receive, without expense to such Holder, a new Debenture for the unpurchased part so surrendered and the Trustee shall certify and deliver such new Debenture upon receipt of the Debenture so surrendered. SECTION 3.9 CANCELLATION OF PURCHASED DEBENTURES. All Debentures redeemed or purchased in whole or in part pursuant to this Article 3 shall be forthwith delivered to and cancelled by the Trustee and may not be reissued or resold and no Debentures shall be issued in substitution therefor. ARTICLE 4 CONVERSION AND SHARE REPAYMENT RIGHT SECTION 4.1 CONVERSION RIGHT. (1) Each Holder shall have the right, at its option, at any time and from time to time, to convert as of and with effect on the date specified by such Holder in its Conversion Notice (such date a "CONVERSION DATE"), which date shall be not less than four Business Days and not more than 15 Business Days from the 31 -25- day the Trustee receives such Conversion Notice, each $1,000 principal amount of its Debentures into that number of Exchangeable Shares equal to the Conversion Number in effect on the date of the Conversion Notice, all on the terms and subject to the conditions provided in this Article 4. For greater certainty, the date of the Conversion Notice is (and shall be deemed to be) the date the Holder delivers such Conversion Notice to the Trustee (subject to Section 4.1(2)) as opposed to the Conversion Date (which date shall be a later date specified as aforesaid in such Conversion Notice). (2) In order to exercise the right to convert provided pursuant to Section 4.1(1), the Holder will be required to deliver to the Trustee, at the place at which the register is maintained pursuant to Section 2.9, a conversion notice (the "CONVERSION NOTICE") in the form set forth in Schedule "C" hereto duly completed and executed by the Holder or its executors or administrators or other legal representatives or its or their attorney duly appointed by instrument in form and execution satisfactory to the Trustee, together with the related Debentures. The Trustee shall provide a copy of each Conversion Notice that it receives to the Corporation as soon as reasonably practicable and in any event by 5:00 p.m. (in the place at which the register is maintained pursuant to Section 2.9) on the Business Day immediately following the Business Day on which such notice is received by the Trustee. A Conversion Notice received by the Trustee after 4:30 p.m. (in the place at which the register is maintained pursuant to Section 2.9) on any day shall be deemed to have been received by the Trustee on the first Business Day after such day. (3) The Conversion Notice shall specify the principal amount of Debentures to be converted (to be not more than the aggregate principal amount of the Debentures delivered to the Trustee), provided that Debentures may only be converted in respect of principal amounts of $1,000 and integral multiples thereof. (4) On each Conversion Date, provided that it has not elected to pay the Conversion Value in cash pursuant to Section 4.2, the Corporation shall ensure that the following conditions are met: (a) The qualification of the Exchangeable Shares to be issued on conversion as Freely Tradeable; (b) The listing (or the functional equivalent thereof) of such additional Exchangeable Shares on the TSE; (c) The Corporation being a reporting issuer (or its equivalent) in good standing under Applicable Securities Legislation where the distribution of such Exchangeable Shares occurs and where such legislation recognizes the status of a reporting issue (or its equivalent); 32 -26- (d) No Event of Default shall have occurred and be continuing; and (e) The receipt by the Trustee of an Officers' Certificate stating that conditions (a), (b), (c) and (d) above have been satisfied and setting forth the number of Exchangeable Shares to be delivered for each $1,000 principal amount of Debentures and the calculation of the Conversion Number as of the date of the applicable Conversion Notice. If the foregoing conditions are not satisfied prior to the close of business (in the City of Toronto, Ontario) on such Conversion Date, the Corporation shall pay in cash the Conversion Value of the Debentures to be converted on such Conversion Date, together with such other amounts as are contemplated and payable in accordance with Section 4.4 (less any tax required by law to be deducted), unless the Holder of such Debenture waives the conditions which are not satisfied. (5) If a Holder has elected to convert Debentures in accordance with this Section 4.1 and if the Conversion Value (or any portion thereof) to which a Holder is entitled is subject to withholding taxes, the Corporation, for the account of the Holder, shall sell, or cause to be sold, through investment banks, brokers or dealers selected by the Corporation, out of the Exchangeable Shares issued by the Corporation pursuant to this Section 4.1, such number of Exchangeable Shares that is sufficient to yield net proceeds (after payment of all costs) to cover the amount of taxes required to be withheld, and shall remit same, or cause same to be remitted on behalf of the Corporation, to the proper tax authorities within the period of time prescribed for this purpose under applicable laws. SECTION 4.2 RIGHT TO PAY CONVERSION VALUE IN CASH IN LIEU OF CONVERSION. (1) If a Holder elects to convert its Debentures on a Conversion Date, the Corporation shall have the right to elect to pay such Holder, in lieu of delivering Exchangeable Shares on conversion, the Conversion Value (as of the date of the applicable Conversion Notice) for each $1,000 principal amount of Debentures tendered for conversion, together with such other amounts as are contemplated and payable in accordance with Section 4.4, in cash in lawful money of Canada (less any tax required by law to be deducted). (2) Without limiting the rights of the Corporation pursuant to Section 4.3, the Corporation shall exercise its right pursuant to Section 4.2(1) by notifying the Trustee and the Holder as soon as reasonably practicable (and in any event by transmitting such notice to the Trustee by facsimile or other means of electronic communication by 5:00 p.m. (London, England time) on the second Business Day after receipt by the Corporation of the applicable Conversion Notice and by depositing such notice, addressed to the Holder, in the mail or with a courier on or before the third Business Day after receipt by the Corporation of the 33 -27- applicable Conversion Notice) that the Corporation elects to pay the Conversion Value in cash to such Holder in lieu of delivering Exchangeable Shares on conversion. If the Corporation determines not to exercise its right pursuant to Section 4.2(1) it shall so advise the Trustee as soon as reasonably practicable (and in any event by transmitting such notice to the Trustee by facsimile or other means of electronic communication by 5:00 p.m. (London, England time) on the second Business Day after receipt by the Corporation of the applicable Conversion Notice. If no notice is transmitted to the Trustee pursuant to this Section 4.2(2) by 5:00 p.m. (London, England time) on the second Business Day following the receipt by the Corporation of the applicable Conversion Notice, the Corporation shall be deemed to have notified the Trustee that it has not elected to exercise its right pursuant to Section 4.2(1). After the Trustee has received any such notice from the Corporation (or been deemed to have been so notified), the Trustee shall respond to any inquiries it receives from such Holder concerning whether or not the Corporation has elected to pay the Conversion Value in cash. SECTION 4.3 RIGHT TO REPAY PRINCIPAL AMOUNT IN EXCHANGEABLE SHARES ON MATURITY. (1) The Corporation shall have the right to elect to satisfy the obligation to repay on the Maturity Date the principal amount of all, but not less than all, of the Debentures outstanding by delivering to the Trustee, for each $1,000 principal amount of the Debentures, that number of Freely Tradeable Exchangeable Shares equal to the number obtained by dividing $1,000 by 95% of the Current Market Price on the Maturity Date (the "SHARE REPAYMENT RIGHT"). (2) The Corporation shall send to the Debentureholders in the manner provided in Section 2.16, at least 10 Business Days and not more than 20 Business Days prior to the Maturity Date, a notice (the "MATURITY NOTICE") in the form set forth in Schedule "D-1" hereto together with an exercise notice (an "EXERCISE NOTICE") in the form set forth in Schedule "D-2" hereto. The Maturity Notice will provide Debentureholders with the following options: (a) to convert their Debentures to Exchangeable Shares, only if the AMVESCAP Share Value on the Maturity Date is greater than or equal to $1,000, subject to the right of the Corporation to pay the Conversion Value in cash; (b) to convert their Debentures to Exchangeable Shares, whether or not the AMVESCAP Share Value on the Maturity Date exceeds $1,000, subject to the right of the Corporation to pay the Conversion Value in cash; or (c) to receive payment of the principal amount of the Debentures in cash, subject to exercise by the Corporation of the Share Repayment Right; 34 -28- it being understood, in each case, that all accrued interest, if any, shall be paid in cash. (3) In order to select an option provided pursuant to Section 4.3(2), Debentureholders will be required to deliver to the Trustee at any place at which the register is maintained pursuant to Section 2.9 or any other place specified in the Maturity Notice before the Determination Date an Exercise Notice duly completed and executed by the Holder or its executors or administrators or other legal representatives or its or their attorney duly appointed by instrument in form and execution satisfactory to the Trustee, together with the related Debentures. A Debentureholder who does not deliver a duly completed Exercise Notice at or before the close of business (in the City of Toronto, Ontario) on the Determination Date will be deemed to have selected option (a) set out in Section 4.3(2) and the Debentures held by such Holders will automatically be converted into Exchangeable Shares, subject to the right of the Corporation to pay the Conversion Value in cash, if the AMVESCAP Share Value on the Maturity Date is greater than or equal to $1,000. (4) The Corporation shall specify in the Maturity Notice whether it will deliver Exchangeable Shares on conversion of the Debentures or, in lieu of delivering Exchangeable Shares on conversion, it elects to pay the Conversion Value in cash (less any tax required by law to be deducted) and whether, if a Holder selects option (c) set out in Section 4.3(2), the Corporation will, in lieu of paying cash on maturity, exercise the Share Repayment Right and deliver Exchangeable Shares to such Holder. If a Holder selects option (c) set out in Section 4.3(2) and the Corporation does not exercise the Share Repayment Right, the Corporation shall pay to such Holder the principal amount of its Debentures in cash on the Maturity Date. (5) The Trustee shall, on the Business Day immediately following the Determination Date, deliver written notice to the Corporation of the aggregate principal amount of Debentures which Holders have elected or are deemed to have elected to convert. (6) On the Business Day preceding the Maturity Date, if any Debentureholder selects (or is deemed to have selected) option (a) or option (b) set out in Section 4.3(2) and the Corporation has not exercised its right to pay the Conversion Value in cash, or if the Corporation has exercised the Share Repayment Right, the Corporation shall ensure that the following conditions are met: (a) The qualification of the Exchangeable Shares to be issued on conversion or pursuant to the Share Repayment Right as Freely Tradeable; 35 -29- (b) The listing (or the functional equivalent thereof) of such additional Exchangeable Shares on the TSE; (c) The Corporation being a reporting issuer (or its equivalent) in good standing under Applicable Securities Legislation where the distribution of such Exchangeable Shares occurs and where such legislation recognizes the status of a reporting issuer (or its equivalent); (d) No Event of Default shall have occurred and be continuing; (e) The receipt by the Trustee of an Officers' Certificate stating that conditions (a), (b), (c) and (d) above have been satisfied and setting forth the number of Exchangeable Shares to be delivered for each $1,000 principal amount of Debentures and the calculation of the Conversion Number; and (f) The receipt by the Trustee of an Opinion of Counsel to the effect that such Exchangeable Shares have been duly authorized and, when issued and delivered pursuant to the terms of this Indenture, will be validly issued as fully paid and non-assessable and, that conditions (a) and (b) above have been satisfied and that, relying exclusively on certificates of good standing issued by the relevant securities authorities, condition (c) above is satisfied, except that such opinion in respect of condition (c) need not be expressed with respect to those provinces where certificates of good standing are not issued by the securities authorities. If the foregoing conditions are not satisfied prior to the close of business (in the City of Toronto, Ontario) on the Business Day preceding the Maturity Date, the Corporation shall pay in cash the Conversion Value of the Debentures held by any such Debentureholder together with all interest on such Debentures accrued to, but excluding, the Maturity Date (less any tax required by law to be deducted), unless the Debentureholder waives the conditions which are not satisfied. (7) In the event that the Corporation exercises its Share Repayment Right, or a Debentureholder selects (or is deemed to have selected) option (a) or option (b) set out in Section 4.3(2) and the Corporation has not exercised its right to pay the Conversion Value in cash, upon presentation and surrender of the Debenture for payment on maturity at the place where the register is maintained pursuant to Section 2.9 or any other place specified in the Maturity Notice, the Corporation shall (i) pay or cause to be paid in cash to the Holder thereof all accrued and unpaid interest to the Maturity Date and the cash equivalent contemplated for fractional shares in Section 4.5, if any, in each case less any tax required by law to be deducted; and (ii) deliver or cause to be delivered to the Holder thereof, 36 -30- certificates representing the Freely Tradeable Exchangeable Shares to which such Holder is entitled. (8) If the repayment by delivery of Exchangeable Shares (or any portion thereof) to which a Holder is entitled pursuant to this Section 4.3 or the conversion of Debentures into Exchangeable Shares pursuant to option (a) or option (b) set out in Section 4.3(2) is subject to withholding taxes, the Corporation, for the account of the Holder, shall sell, or cause to be sold, through investment banks, brokers or dealers selected by the Corporation, out of the Exchangeable Shares issued by the Corporation pursuant to this Section 4.3, such number of Exchangeable Shares that is sufficient to yield net proceeds (after payment of all costs) to cover the amount of taxes required to be withheld, and shall remit same, or cause same to be remitted on behalf of the Corporation, to the proper tax authorities within the period of time prescribed for this purpose under applicable laws. SECTION 4.4 COMPLETION OF CONVERSION. (1) As soon as reasonably practicable but in any event on or prior to the fifth Business Day after each Conversion Date, the Corporation and/or the Trustee shall send by first class mail, postage prepaid, to each Holder who has elected to convert its Debentures pursuant to Section 4.1 on such Conversion Date: (a) a cheque for the Conversion Value of each $1,000 principal amount of Debentures which such Holder has elected to convert together with interest on such Conversion Value at the rate of 6.00% per annum for the period from and including the Business Day immediately after such Conversion Date to but excluding the day such cheque is deposited in the mail, provided that the Corporation has exercised its right pursuant to Section 4.2, or certificates for the Exchangeable Shares to which such Holder is entitled provided that such Debentureholder has not completed the Retraction Request forming part of the Conversion Notice; (b) a cheque for interest accrued on such Debentures from the last date to which interest has been paid on such Debentures to but excluding the Conversion Date; (c) a cheque for the cash equivalent for any fractional Exchangeable Share contemplated by Section 4.5 to which such Holder is entitled; and (d) if such Holder has elected to convert a principal amount of Debentures (the "EXERCISED AMOUNT") which is less than the principal amount of the Debentures delivered by such Holder to the Trustee with the Holder's Conversion Notice (the "REGISTERED AMOUNT"), Debenture(s) registered in the name of such Holder in an aggregate principal amount equal to the amount by which the registered amount exceeds the exercised amount, less in all cases any tax required by law to be deducted. (2) All Debentures converted in whole or in part shall be delivered to and cancelled by the Trustee in accordance with Article 10 and the Trustee shall amend the register maintained by it pursuant to Section 2.9 accordingly. 37 -31- (3) The Corporation shall provide to the Trustee the certificates for the Exchangeable Shares and for the Debentures to be delivered pursuant to Section 4.4(1), if any, and pay to the Trustee sufficient funds, by certified cheque, bank draft or wire transfer, in a timely manner, to permit the Trustee to fulfil its obligations under Section 4.4(1) and to make the payments, if any, required by Section 4.2 and Section 4.5. SECTION 4.5 FRACTIONAL SHARES. No fractional Exchangeable Shares shall be delivered upon the conversion of Debentures or exercise of the Share Repayment Right but, in lieu thereof, the Corporation shall pay, or cause to be paid, to a Debentureholder who would otherwise be entitled to a fractional Exchangeable Share the cash equivalent thereof (determined on the basis of the Current Market Price on the date of the Conversion Notice or the Maturity Date, as applicable), less any tax required by law to be deducted. SECTION 4.6 RELATING TO THE ISSUE OF EXCHANGEABLE SHARES. (1) A Holder shall be treated as the shareholder of record of the Exchangeable Shares issued on due conversion of its Debentures or due exercise by the Corporation of the Share Repayment Right, and the issuance of Exchangeable Shares shall be deemed to have occurred for all purposes effective immediately after the close of business (in the City of Toronto, Ontario) on the Conversion Date, in the case of a conversion pursuant to Section 4.1 or on the Maturity Date, in the case of the exercise of the Share Repayment Right pursuant to Section 4.3, and such Holder shall be entitled to all substitutions therefor, all income earned thereon or accretions thereto and all dividends or distributions (including stock dividends and dividends or distributions in kind) thereon and arising thereafter and in the event that the Trustee receives the same, it shall hold the same in trust for the benefit of such Holder. (2) The Corporation shall at all times reserve and keep available out of its authorized Exchangeable Shares (if the number thereof is or becomes limited) solely for the purpose of issue and delivery upon the conversion of Debentures or the exercise of the Share Repayment Right as provided herein, and shall issue to Debentureholders who may exercise their conversion rights hereunder or to whom Exchangeable Shares shall be issued pursuant to exercise of the Share Repayment Right, such number of Exchangeable Shares as shall be issuable in such events. All Exchangeable Shares which shall be so issued shall be duly and validly issued as fully paid and non-assessable. (3) The Corporation shall comply with all Applicable Securities Legislation regulating the issue and delivery of Exchangeable Shares upon conversion of Debentures or exercise of the Share Repayment Right and shall cause to be listed 38 -32- and posted for trading (or the function equivalent thereof) such Exchangeable Shares on the TSE. SECTION 4.7 TAXES AND CHARGES ON THE ISSUE OF EXCHANGEABLE SHARES. The Corporation shall from time to time promptly advise the Trustee in writing of, and pay, or make provision satisfactory to the Trustee for the payment of, all taxes and charges which may be imposed by the laws of Canada or any province thereof (except income tax, capital gains tax, withholding tax or security transfer tax, if any) and which shall be payable with respect to the issuance or delivery of Exchangeable Shares to Holders upon the conversion of Debentures or exercise of the Share Repayment Right pursuant to the terms of the Debentures and this Indenture. ARTICLE 5 ADJUSTMENTS SECTION 5.1 ADJUSTMENT UPON SUBDIVISION OR CONSOLIDATION. If and whenever at any time after the date hereof, the outstanding Exchangeable Shares are subdivided or redivided into a greater number of Exchangeable Shares or are reduced, combined or consolidated into a smaller number of Exchangeable Shares or upon a distribution of Exchangeable Shares to all or substantially all holders of Exchangeable Shares by way of a stock dividend or otherwise (other than an issue of shares to holders of Exchangeable Shares who have elected to receive dividends in stock in lieu of receiving cash dividends) (each such event being referred to in this section as a "CHANGE"), the AMVESCAP Share Rate shall thereafter be adjusted to be equal to the number of Exchangeable Shares which a holder of that number of Exchangeable Shares equal to the AMVESCAP Share Rate (prior to such adjustment) would have been entitled to receive as a result of such change on the effective date of such change. SECTION 5.2 REORGANIZATION EVENT. If and whenever at any time after the date hereof there shall occur any Reorganization Event, the AMVESCAP Share Rate and/or the definition of Current Market Price shall be adjusted or revised, respectively, by the board of directors of the Guarantor, subject to the prior consent of the Recognized Stock Exchange on which the Exchangeable Shares are listed, if such consent is required, in such manner as the board of directors of the Guarantor may in their sole discretion determine to be fair and equitable in the circumstances to the Holders, which determination shall be conclusive, and such adjustment shall be effective as of the effective date of such Reorganization Event. 39 -33- SECTION 5.3 ADJUSTMENTS AS A RESULT OF CERTAIN DISTRIBUTIONS AND EXTRAORDINARY CASH DIVIDENDS. (1) If and whenever at any time after the date hereof, the Corporation shall (i) make a distribution of Distributed Property to all or substantially all holders of the Exchangeable Shares or (ii) issue options, rights or warrants to all or substantially all holders of the Exchangeable Shares entitling them to acquire Exchangeable Shares or other securities convertible into, or exchangeable for, Exchangeable Shares at less than 95% of the Current Market Price prevailing at the time of such issue, then the AMVESCAP Share Rate shall thereafter be equal to: 1000 ------- (A - B) where: A equals 1,000 divided by the AMVESCAP Share Rate in effect immediately prior to the distribution or issue; and B is a number equal to the value of the Distributed Property, or the value of such options, rights or warrants, in respect of each Exchangeable Share as determined by the Directors, acting reasonably, which determination shall be conclusive provided, however, that for purposes of this Section 5.3(1) the value of any such rights shall be deemed to be zero if at the time the Corporation issues such rights: (a) the Corporation issues to each Debentureholder the number of such rights such Debentureholder would have been entitled to receive if such Debentureholder had converted its Debentures into Exchangeable Shares on the record date for the issue of such rights, provided that, if as a result of the issuance of such rights to a Debentureholder there would be a requirement to file a registration statement with the Securities and Exchange Commission in the United States or a similar document in any other jurisdiction or ongoing disclosure or other requirements in the United States or in any other jurisdiction, the Corporation shall not issue any such rights to such Debentureholder but in lieu of the rights such Debentureholder would otherwise be entitled to receive, such Debentureholder shall be entitled to receive a cash payment equal to the net proceeds (after expenses) received by or on behalf of the Corporation upon the sale of such rights and promptly after the issuance of such rights, the Corporation shall sell such rights or shall cause such rights to be sold; and (b) such rights are listed (or the functional equivalent thereof) on the TSE. 40 -34- (2) If and whenever at any time after the date hereof payment of a cash dividend by the Corporation results in an Extraordinary Cash Dividend in respect of the calendar year in which the dividend was paid, the AMVESCAP Share Rate shall thereafter be equal to: 1000 ------- (A - B) where: A equals 1,000 divided by the AMVESCAP Share Rate in effect immediately prior to the payment of the Extraordinary Cash Dividend; and B is a number equal to the amount of the Extraordinary Cash Dividend in respect of each Exchangeable Share. SECTION 5.4 DISCRETIONARY ADJUSTMENT. In case the Corporation after the date hereof shall take any action affecting, or relating to, the Exchangeable Shares, other than any action described in Section 5.1 or Section 5.3 which in the opinion of the Directors would prejudicially affect the rights of Holders upon conversion, the AMVESCAP Share Rate shall be adjusted by the Directors, subject to the prior consent of the Recognized Stock Exchange on which the Exchangeable Shares are listed, if such consent is required, in such manner, if any, and at such time, as they may in their sole discretion determine to be fair and equitable in the circumstances to the Holders, which determination shall be conclusive. Failure of the Directors to take action so as to provide for an adjustment on or prior to the effective date of any action by the Corporation affecting the Exchangeable Shares shall be conclusive evidence that the Directors have determined that it is fair and equitable to make no adjustment in the circumstances. SECTION 5.5 CHANGES AFFECTING EXCHANGEABLE SHARES. If and whenever at any time after the date hereof there shall be a reclassification or redemption of Exchangeable Shares (other than a subdivision, redivision, reduction, combination or consolidation), a change of Exchangeable Shares into other shares or into other securities, a consolidation, amalgamation, merger, reorganization or arrangement of the Corporation with or into any other corporation or other entity (other than a consolidation, amalgamation, merger, reorganization or arrangement which does not result in a re-classification or change of the outstanding Exchangeable Shares) (any such event being herein called a "CAPITAL REORGANIZATION"), then notwithstanding any other provision of this Indenture, after the effective date of such Capital Reorganization any Holder who is entitled to receive Exchangeable Shares as a result of the exercise by the Holder after such date of its conversion right or the exercise by the Corporation after such date of the Share Redemption Right or the Share Repayment Right shall be entitled to receive and shall accept, in lieu of Exchangeable Shares, such other shares or 41 -35- securities or other property which such Holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of Exchangeable Shares. After the effective date of such Capital Reorganization, the other provisions of this Indenture including, without limitation, Section 3.6, Section 4.1 and Section 4.3, shall be revised to the extent necessary, as determined by the Directors in their sole discretion, which determination shall be conclusive, to give effect to the foregoing provisions of this Section 5.5. SECTION 5.6 RULES APPLICABLE TO ADJUSTMENTS. (1) The adjustments provided for in Section 5.1 and Section 5.3 shall be cumulative and all adjustments provided for in Article 5 shall be made successively. Notwithstanding the foregoing, (i) no adjustment to the calculation of the AMVESCAP Share Rate will be required, unless the cumulative effect of such adjustment would result in a change of at least 1.00% to such rate and (ii) there will be no adjustment of the AMVESCAP Share Rate in respect of any event described in Section 5.3(1) if the Debentureholders are allowed to participate as though they had converted their Debentures prior to the applicable record date or effective date, subject to the approval of any Recognized Stock Exchange on which the Exchangeable Shares are listed. (2) If a dispute shall at any time arise with respect to the adjustments provided for in this Article 5, such dispute shall be conclusively determined by the Directors, subject to the prior consent of the Recognized Stock Exchange on which the Exchangeable Shares are listed, if required, and any such determination shall be binding upon the Corporation, the Guarantor, the Trustee and the Holders. (3) If necessary and determined appropriate by the Directors, appropriate adjustments shall be made by the Directors in the application of the provisions set forth in this Article 5 with respect to the rights and interest thereafter of Holders so that the adjustments as set forth in this Article 5 shall thereafter correspondingly be made in relation to any shares, other securities or other property thereafter deliverable upon conversion of Debentures. (4) The Corporation shall from time to time immediately after the occurrence of any event which requires an adjustment in the AMVESCAP Share Rate or the occurrence of a Reorganization Event or a Capital Reorganization provide to the Trustee an Officers' Certificate specifying the nature of such event and the impact thereof on the terms of the Debentures and setting forth in reasonable detail the method of calculation of any adjustment. SECTION 5.7 NOTICE OF SPECIAL EVENTS. The Corporation shall give notice to the Debentureholders in the manner provided in Section 2.16 as soon as practicable and in any event within 10 Business 42 -36- Days following the occurrence of any event referred to in Section 5.6(4) and such notice shall specify the particulars of such event and any resulting adjustments to be made in the terms of the Debentures. Contemporaneously with the giving of such notice, the Corporation shall issue a press release over a newswire service in Canada and the United Kingdom advising Debentureholders of the occurrence of such event and the particulars thereof and any resulting adjustments to be made in the terms of the Debentures. ARTICLE 6 SUBORDINATION OF DEBENTURES SECTION 6.1 AGREEMENT TO SUBORDINATE. Each Debentureholder, by its acceptance thereof, acknowledges and agrees, that the payment of all amounts owing hereunder or under the Debentures is hereby expressly subordinated and postponed, to the extent and in the manner hereinafter set forth, in right of payment to the prior payment in full of all Senior Liabilities. Without prejudice to the rights of any other holder of Senior Liabilities not having done so, the benefit of this Article 6 and of any other provision hereof and of the Debentures relating to the subordination and postponement thereof may be accepted at any time by or on behalf of any holder of Senior Liabilities by written notice to the Trustee. SECTION 6.2 DISTRIBUTION ON INSOLVENCY OR WINDING-UP. In the event of any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization or other similar proceedings relative to the Corporation or the Guarantor, or to the property or assets of the Corporation or the Guarantor, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Corporation or the Guarantor: (a) The holders of all Senior Liabilities will first be entitled to receive payment in full of all amounts payable under the Senior Liabilities, before the Debentureholders will be entitled to receive any payment or distribution of any kind or character, whether in cash, property or securities, which may be payable or deliverable in any such event in respect of any of the Debentures; (b) Any payment by, or distribution of assets of, the Corporation or the Guarantor of any kind or character, whether in cash, property or securities (other than securities of the Corporation or the Guarantor or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in this Article 6 with respect to the Debentures, to the payment of all Senior Liabilities, provided that (i) the Senior Liabilities are assumed by the new corporation(s), if any, resulting from such reorganization or readjustment 43 -37- and (ii) without prejudice to the rights of such holders with respect to any such plan (including without limitation as to whether or not to approve same and on what conditions to do so), the rights of the holders of Senior Liabilities are not altered adversely by such reorganization or readjustment) to which the Debentureholders or the Trustee would be entitled, except for the provisions of this Article 6, will be paid or delivered by the Person making such payment or distribution, whether a trustee in bankruptcy, a receiver, a receiver-manager, a liquidator or otherwise, directly to the holders of Senior Liabilities or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Liabilities may have been issued, subject to the terms of such Senior Liabilities including, without limitation, the ranking, if any, amongst such Senior Liabilities, rateably according to the aggregate amounts remaining unpaid on account of the Senior Liabilities held or represented by each, to the extent necessary to make payment in full of all Senior Liabilities remaining unpaid after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Liabilities; and (c) Subject to Section 6.6, if, notwithstanding the foregoing, any payment by, or distribution of assets of, the Corporation or the Guarantor of any kind or character, whether in cash, property or securities (other than securities of the Corporation or the Guarantor or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in this Article 6 with respect to the Debentures, to the payment of all Senior Liabilities, provided that (i) the Senior Liabilities are assumed by the new corporation(s), if any, resulting from such reorganization or readjustment and (ii) without prejudice to the rights of such holders with respect to any such plan (including without limitation as to whether or not to approve same and on what conditions to do so), the rights of the holders of Senior Liabilities are not altered adversely by such reorganization or readjustment), is received by the Trustee or the Debentureholders before all Senior Liabilities are paid in full, such payment or distribution will be held in trust for the benefit of and, subject to the terms of such Senior Liabilities including, without limitation, the ranking, if any, amongst such Senior Liabilities, will be paid over to the holders of such Senior Liabilities or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Liabilities may have been issued, rateably as aforesaid, for application to the payment of all Senior Liabilities remaining unpaid until such Senior Liabilities have been paid in full, after giving effect to any concurrent 44 -38- payment or distribution (or provision therefor) to the holders of such Senior Liabilities. SECTION 6.3 SUBROGATION OF DEBENTURES. Subject to the prior payment in full of all Senior Liabilities, the Debentureholders shall be subrogated to the rights of the holders of Senior Liabilities to receive payments and distributions of assets of the Corporation or the Guarantor in respect of and on account of Senior Liabilities, to the extent of the application thereto of moneys or other assets which would have been received by the Debentureholders, but for the provisions of this Article 6, until the principal of and interest and all other amounts owing on the Debentures and under this Indenture shall be paid in full. No payment or distribution of assets of the Corporation or the Guarantor to the Debentureholders which would be payable or distributable to the holders of Senior Liabilities pursuant to this Article 6 shall, as between the Corporation, the Guarantor, their creditors (other than the holders of Senior Liabilities) and the Debentureholders, be deemed to be a payment by the Corporation or the Guarantor to or on account of the Debentureholders, it being understood that the provisions of this Article 6 are, and are intended, solely for the purpose of defining the relative rights of the Debentureholders, on the one hand, and the holders of the Senior Liabilities, on the other hand. Nothing contained in this Article 6 or elsewhere in this Indenture or in the Debentures is intended to or shall impair, as between the Corporation or the Guarantor and their respective creditors (other than the holders of Senior Liabilities and the Debentureholders), the obligation of the Corporation or the Guarantor, which is unconditional and absolute, to pay to the Debentureholders the principal of and interest on the Debentures, as and when the same shall become due and payable in accordance with their terms, or to affect the relative rights of the Debentureholders and the creditors of the Corporation, other than the holders of the Senior Liabilities, nor shall anything herein or therein prevent the Trustee or the Holder of any Debentures from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to Article 9 and the rights, if any, under this Article 6, of the holders of Senior Liabilities upon the exercise of any such remedy. SECTION 6.4 NO PAYMENT TO DEBENTUREHOLDERS IF EVENT OF DEFAULT UNDER THE SENIOR LIABILITIES. (1) Upon the maturity of any Senior Liabilities by lapse of time, acceleration or otherwise, then, except as hereinafter otherwise provided in Section 6.4(3), all amounts payable under such Senior Liabilities shall first be paid in full, or shall first have been duly provided for, before any payment on account of principal of or interest or any other amount owing on the Debentures or under this Indenture is made. (2) Except as hereinafter otherwise provided in Section 6.4(3), the Corporation and the Guarantor shall not make any payment, and the Debentureholders shall not 45 -39- be entitled to demand, institute proceedings for the collection of, or receive any payment or benefit (including without limitation by compensation, set-off, combination of accounts or realization of security or otherwise in any manner whatsoever) on account of the indebtedness represented by the Debentures (other than pursuant to the right of conversion) (i) in a manner inconsistent with the terms (as they exist on the date hereof) of this Indenture or of the Debentures, or (ii) at any time when a default or an event of default, as defined in any Senior Liabilities or any instrument evidencing the same and permitting, by the lapse of time or giving of notice, the holders thereof to accelerate the maturity thereof, has occurred under any Senior Liabilities and is continuing and notice of such default or event of default has been given by or on behalf of the holders of Senior Liabilities to the Corporation or the Guarantor, as the case may be, unless and until such Senior Liabilities have been paid and satisfied in full, or unless and until such default or event of default shall have been cured or waived or shall have ceased to exist in accordance with the provisions of such Senior Liabilities. (3) For greater certainty but without limiting the generality of the foregoing, this Section 6.4 shall not be construed so as to prevent the Trustee from receiving and retaining any payments on account of Debentures which are made (i) in a manner that is consistent with the terms of this Indenture or of the Debentures and (ii) at any time when no default or event of default, as defined in any Senior Liabilities or any instrument evidencing the same and permitting, by the lapse of time or giving of notice, the holders thereof to accelerate the maturity thereof, has occurred and is continuing and in respect of which notice has not been given by or on behalf of the holders of Senior Liabilities to the Corporation or the Guarantor. SECTION 6.5 AUTHORIZATION OF DEBENTUREHOLDERS TO TRUSTEE TO EFFECT SUBORDINATION. Each Holder of Debentures, by its acceptance thereof, authorizes and directs the Trustee, on its behalf, to take such action as may be necessary or appropriate to effect the subordination and postponement provided for in this Article 6 and appoints the Trustee its attorney-in-fact for any and all such purposes. SECTION 6.6 KNOWLEDGE OF TRUSTEE. Notwithstanding the provisions of this Article 6, the Trustee will not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of moneys to or by the Trustee, or the taking of any other action by the Trustee, unless and until the Trustee has received written notice thereof from or on behalf of the Corporation, the Guarantor, any Debentureholder or any holder or representative of any Senior Liabilities. 46 -40- SECTION 6.7 TRUSTEE MAY HOLD SENIOR LIABILITIES. The Trustee is entitled to all the rights set forth in this Article 6 with respect to any Senior Liabilities at the time held by it, to the same extent as any other holder of Senior Liabilities, and nothing in this Indenture deprives the Trustee of any of its rights as such holder. SECTION 6.8 RIGHTS OF HOLDERS OF SENIOR LIABILITIES NOT IMPAIRED. No right of any present or future holder of any Senior Liabilities to enforce the subordination and postponement provided for in this Article 6 will at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Corporation or the Guarantor or by any non-compliance by the Corporation or the Guarantor with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. SECTION 6.9 ALTERING THE SENIOR LIABILITIES. The holders of the Senior Liabilities have the right to extend, renew, modify or amend the terms of the Senior Liabilities or any security therefor and to release, sell or exchange such security and otherwise to deal freely with the Corporation and the Guarantor, all without notice to or consent of the Debentureholders or the Trustee and without affecting the liabilities and obligations of the parties to this Indenture or the Debentureholders or the subordination and postponement provided for in this Article 6. SECTION 6.10 ADDITIONAL INDEBTEDNESS. This Indenture does not restrict the Corporation or the Guarantor from incurring additional Indebtedness or mortgaging, pledging or charging its properties to secure any Indebtedness. SECTION 6.11 RIGHT OF DEBENTUREHOLDER TO CONVERT NOT IMPAIRED. The subordination of the Debentures to the Senior Liabilities and the provisions of this Article 6 do not impair in any way the right of a Debentureholder to convert its Debentures pursuant to Section 4.1. ARTICLE 7 GUARANTEE OF AMVESCAP SECTION 7.1 GUARANTEE FOR BENEFIT OF ALL DEBENTUREHOLDERS The provisions of this Article 7 are for the benefit of, and the Trustee shall hold all rights hereby conferred in trust for the equal and rateable benefit of, all present and future Debentureholders. 47 -41- SECTION 7.2 GUARANTEE OF PRINCIPAL, INTEREST AND OTHER AMOUNTS Subject to Article 6: (a) The Guarantor agrees to be liable for and irrevocably and unconditionally guarantees the full and prompt payment when due (whether at stated maturity, by acceleration or otherwise) and at all times thereafter, and performance, of all of the obligations hereinafter owing to Debentureholders and the Trustee by the Corporation pursuant to this Indenture and the Debentures. The obligations of the Guarantor under this Article 7 are primary, absolute and unconditional; and (b) This guarantee by the Guarantor is a continuing guarantee of payment and performance, in full, of the obligations of the Corporation under this Indenture and the Debentures and not of collection and is in no way conditional or contingent upon any attempt to collect from the Corporation. The obligations of the Guarantor under this Article 7 shall not be discharged until payment and performance, in full, of the obligations of the Corporation under this Indenture and the Debentures has occurred and the Trustee has become obligated pursuant to Section 10.4 to execute and deliver such deeds or other instruments as shall be requisite to release the Corporation and the Guarantor from the terms of this Indenture and the Debentures, except those relating to the indemnification of the Trustee. In the event of a default in payment of any amounts owing under this Indenture or the Debentures or in performance of any of the Corporation's obligations under this Indenture or the Debentures, the Trustee (or any Debentureholder when so permitted under this Indenture) may institute legal proceedings directly against the Guarantor to enforce this guarantee without proceeding against the Corporation. SECTION 7.3 THE GUARANTOR'S LIABILITY ON DISCHARGE OF THE CORPORATION (1) Subject to Article 6, in the event that: (a) The Trustee, pursuant to Section 9.1, shall have declared the principal of and interest on the Debentures then outstanding and any other amounts payable under this Indenture to be due and payable and that no part of or a portion only such principal and interest or any other amounts payable under this Indenture shall have been paid by or on behalf of the Corporation and by operation of law the Corporation shall have been discharged from all further liability under or in respect of the Debentures; (b) Pursuant to any compromise or arrangement, whether voluntary or involuntary, between the Corporation and its creditors or any of them, the 48 -42- Debentures are cancelled or the terms thereof are modified, or this Indenture terminated; (c) In any other way, the Corporation is released from its obligations under and with respect to the Debentures or any amounts payable under this Indenture or any part thereof, then for all purposes hereof the Debentures and all amounts payable under this Indenture shall nevertheless be deemed to be still in existence and outstanding and the Guarantor shall, on the date of such discharge, cancellation, modification, termination or release, be primarily liable to make payment of interest (including interest on amounts in default) and principal on the Debentures and all other amounts payable under this Indenture in the same manner as though the Guarantor were a party to this Indenture in place of the Corporation and with primary liability hereunder but only to the extent that there are insufficient funds in the hands of the Trustee at such time to make such payment. (2) Subject to Article 6, for the purposes of the foregoing, the Guarantor shall pay as aforesaid to the Trustee, for the equal and rateable benefit of each and every Debentureholder, the amounts required to be paid on the dates provided for such payments under the provisions of this Indenture. SECTION 7.4 LIABILITY OF THE GUARANTOR (1) The Guarantor agrees with the Trustee that, as among the Guarantor, the Debentureholders and the Trustee, the obligations of the Guarantor shall not be satisfied, reduced, affected or discharged by time being given, or any other forbearance whatsoever whether as to time of performance or otherwise, including, without limitation, the acceptance of any partial payment or performance of any obligations of the Corporation under this Indenture or the Debentures, or by any failure or delay in giving any notice required under this Indenture. (2) The Guarantor agrees that its obligations under this Article 7 shall not be affected or impaired by any act, omission, matter or thing whatsoever occurring before, upon or after any of the obligations of the Corporation under this Indenture or the Debentures become due and payable which might constitute a whole or partial defence to a claim against the Guarantor under this Article 7 or might operate to release or otherwise exonerate the Guarantor from any of its obligations under this Article 7 or otherwise affect such obligations. (3) The Trustee and the Debentureholders may, pursuant to the terms of this Indenture, modify, extend, renew, replace, amend, supplement, continue or alter any provisions of the Debentures or this Indenture and may deal with the 49 -43- Corporation, the Debentures and this Indenture without releasing, discharging, limiting or otherwise affecting in whole or in part the obligations of the Guarantor under this Article 7, without the consent of or notice to the Guarantor and, for greater certainty, the Debentureholders and the Trustee shall not be bound either to seek or exhaust their recourse against the Corporation or against any other Person or against the property of the Corporation or of any other Person before being entitled, subject to Article 6, to payment from the Guarantor. SECTION 7.5 SUBROGATION (1) Any payment by or recovery from the Guarantor of any amounts payable by the Corporation under this Indenture shall not (except as between the Corporation and the Debentureholders and the Trustee and to the extent of any such payment) be taken to relieve the Corporation from liability for such payment, but such liability of the Corporation shall continue unimpaired as a liability enforceable by or on behalf of the Guarantor in respect thereof, and the Guarantor shall be subrogated pro tanto as against the Corporation to the rights, privileges and powers to which the Trustee and/or the Debentureholders were entitled prior to such payment by or on behalf of the Guarantor provided nevertheless that such rights of the Guarantor shall rank subsequent to and not pari passu with the rights of the Trustee and/or the Debentureholders hereunder. The Guarantor shall not, unless and until the whole of the principal amount of the Debentures and the interest thereon and all other amounts owing under this Indenture shall have been paid, be entitled to any rights or remedies in subrogation to the rights, privileges and powers of the Trustee and/or the Debentureholders as aforesaid. (2) Except as hereinbefore in this Section 7.5 expressly provided with respect to the rights of the Guarantor by way of subrogation to the rights, privileges and powers of the Trustee, nothing contained in this Section 7.5 shall or shall be deemed to restrict the recovery by the Guarantor at any time from the Corporation of any amounts that may have been paid by or on behalf of the Guarantor hereunder. (3) If the Trustee shall hold any assets for the benefit of the Debentureholders whether or not such assets are the property of the Corporation or if the Trustee shall be a party to any proceedings, or shall have any rights to institute any proceedings, for the benefit of the Debentureholders, whether against the Corporation or its property or otherwise, the Guarantor shall, at such time as the whole of the principal amount of the Debentures, the interest (including interest on amounts in default) thereon and all other amounts owing under this Indenture shall have been paid, be entitled to all such assets and rights and shall be subrogated to the rights, privileges and powers of the Trustee with respect thereto and with respect to any such proceedings. 50 -44- SECTION 7.6 WAIVER The Guarantor hereby waives notice of acceptance of the guarantee contained in this Article 7 and acknowledges that the guarantee, covenants and agreements of the Guarantor herein contained and provided for shall take effect and are hereby declared to be binding upon the Guarantor notwithstanding any defect in or omission from this Indenture or the Debentures. The Guarantor hereby unconditionally waives notice of any of the matters referred to in Section 9.1, all notices which may be required by any statute, rule of law, contract or otherwise to preserve any rights of the Trustee on behalf of any Debentureholders against the Guarantor hereunder, including any right to the enforcement, assertion or exercise of any right, remedy, power or privilege, and any requirement of diligence on the part of the Trustee. SECTION 7.7 WAIVER OF DEFAULT The Guarantor shall be deemed not to be in default hereunder if the default of the Corporation in respect of which the Guarantor would otherwise be or become liable hereunder shall have been waived or directed to be waived pursuant to Section 9.2. SECTION 7.8 ACKNOWLEDGEMENT The Guarantor acknowledges that the guarantee contained in this Article 7 is in addition to and not in substitution for any other guarantee(s) held or that may hereafter be held by the Trustee. SECTION 7.9 NOTICE TO GUARANTOR Any notices, demands and other communications to the Guarantor under the provisions of this Article 7 shall be valid and effective if delivered in accordance with Section 2.18 of this Indenture. SECTION 7.10 NO SET-OFF RIGHTS The Guarantor shall not have the right to set-off against the obligations of the Guarantor arising under this Article 7 any indebtedness or obligations which may be at any time due and owing by the Trustee or the Debentureholders to the Guarantor. ARTICLE 8 COVENANTS OF THE CORPORATION AND THE GUARANTOR SECTION 8.1 COVENANTS OF THE CORPORATION. The Corporation covenants with the Trustee that so long as any of the Debentures remain outstanding: (a) It will continue to be a wholly-owned subsidiary of the Guarantor; 51 -45- (b) It will duly and punctually pay or cause to be paid to every Debentureholder, or to the Trustee on behalf of every Debentureholder, the principal thereof and any interest accrued thereon, at the dates and places and in the manner provided for herein and in the Debentures; (c) Subject to its rights pursuant to Article 11, it will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, and will, if and whenever required in writing by the Trustee, forthwith file with the Trustee copies of all annual and periodic reports of the Guarantor furnished to the Corporation's shareholders after the date hereof, and at all reasonable times it will furnish or cause to be furnished to the Trustee or its duly authorized agent or attorney such information relating to its business as the Trustee may reasonably require; (d) It will annually, within 120 days of the Corporation's fiscal year end (and at any other reasonable time upon demand by the Trustee), deliver to the Trustee an Officers' Certificate confirming that it has complied with all requirements contained in this Indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an Event of Default, or, if there has been failure to comply, giving particulars thereof; (e) It will remain a reporting issuer (or its equivalent) in good standing under Applicable Securities Legislation where the distribution of Exchangeable Shares may occur in accordance with the terms of this Indenture and the Debentures and where such legislation recognizes the status of reporting issuer (or its equivalent); (f) In order to prevent any accumulation after maturity of unpaid interest, it will not, except with the approval of Holders of a majority in principal amount of Debentures then outstanding expressed by written notice or resolution passed at a meeting of Holders held in accordance with Article 12, directly or indirectly extend or assent to the extension of the time for payment of any interest payable hereunder or be a party to or approve any such arrangement by funding any of such interest or in any other manner. In case the time for payment of any such interest shall be so extended, whether for a definite period or otherwise, such interest shall not be entitled in case of default hereunder to the benefit of this Indenture, except subject to the prior payment in full of the principal of all Debentures then outstanding and of all interest on such Debentures, the payment of which has not been so extended; 52 -46- (g) It will cause the Debentures and, subject to Section 5.5, the Exchangeable Shares to remain listed and posted for trading (or the functional equivalent thereof) on the TSE; (h) It will, at the relevant times and upon exercise of the relevant rights or elections, comply and take all measures necessary to comply at all times with Section 3.6(3), Section 4.1(4) and Section 4.3(6); (i) It will, forthwith upon being notified of any default or event of default by the holders of Senior Liabilities, as contemplated in Section 6.4(2), notify the Trustee of such default or event of default; and (j) Generally, it will duly and punctually perform and carry out all of the acts or things to be done by it as provided in this Indenture. SECTION 8.2 TRUSTEE TO GIVE NOTICE OF EVENT OF DEFAULT. The Trustee shall give to the Holders of Debentures, the Corporation and the Guarantor in the manner provided for in Section 2.16 or Section 2.18, as the case may be, within 30 days after the Trustee becomes aware of the occurrence of any Event of Default, notice of every such Event of Default continuing at the time the notice is given, unless the Trustee reasonably and in good faith determines that it is in the best interests of the Debentureholders to withhold such notice and so informs the Corporation and the Guarantor in writing. SECTION 8.3 PERFORMANCE OF COVENANTS BY TRUSTEE. If the Corporation or the Guarantor fails to perform any of their respective covenants contained in this Indenture, the Trustee may notify the Holders of such failure or may itself perform any of such covenants capable of being performed by it, but shall be under no obligation to do so. All sums so expended or advanced by the Trustee shall be repayable as provided in Section 14.7. No such performance or advance by the Trustee shall relieve or be deemed to relieve the Corporation or the Guarantor of any default hereunder. SECTION 8.4 COVENANT OF THE GUARANTOR. The Guarantor will annually, within 120 days of the Guarantor's fiscal year end (and at any other reasonable time upon demand by the Trustee), deliver to the Trustee (i) an Officers' Certificate confirming that it has complied with all requirements contained in this Indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an Event of Default, or, if there has been failure to comply, giving particulars thereof and (ii) audited consolidated financial statements of the Guarantor for the previous fiscal year. 53 -47- ARTICLE 9 DEFAULT AND ENFORCEMENT SECTION 9.1 EVENTS OF DEFAULT. If and when any one or more of the following events (herein called an "EVENT OF DEFAULT") shall happen with respect to the Debentures, namely: (a) A default in payment of principal of the Debentures when due in cash or by delivery of Exchangeable Shares as required hereunder; (b) A default in payment of interest on the Debentures when due and payable and the continuance of such default for 30 days; (c) A default in performing or observing any of the other covenants, agreements or obligations of the Corporation or the Guarantor as provided herein and the continuance of such default for 60 days after written notice to the Corporation or the Guarantor, respectively, by the Trustee or by the Holders of not less than 25% in principal amount of Debentures then outstanding specifying such default and requiring the same to be remedied, or such longer period of time as the Trustee (having regard to the subject matter of such neglect or non-observance) shall agree to; (d) A decree, judgment, or order by a court having jurisdiction in the premises shall have been entered adjudging the Corporation or the Guarantor a bankrupt or insolvent or approving as properly filed a petition seeking reorganization, readjustment, arrangement, composition or similar relief for the Corporation or the Guarantor, under the Bankruptcy and Insolvency Act (Canada) or any other bankruptcy, insolvency or analogous applicable law of Canada or any province thereof or of England or appointing under any such law a liquidator or trustee or assignee in bankruptcy or insolvency of the Corporation or the Guarantor or of a substantial part of its property, or ordering pursuant to any such law the winding up or liquidation of the affairs of the Corporation or the Guarantor, and such decree, judgement or order shall have remained in force for a period of 30 consecutive days; or any substantial part of the property of the Corporation or the Guarantor shall be sequestered or attached and shall not be returned to the possession of the Corporation or the Guarantor or released from such attachment, as the case may be, whether by filing of a bond, or stay or otherwise, within 30 consecutive days thereafter; (e) The Corporation or the Guarantor shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a 54 -48- bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization, readjustment, arrangement, composition or similar relief under the Bankruptcy and Insolvency Act (Canada) or any other bankruptcy, insolvency or analogous applicable law of Canada or any province thereof or of England or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency for it or of a substantial part of its property, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability, to pay its debts generally as they become due; or (f) A default in respect of any indebtedness for borrowed money of the Corporation or the Guarantor having an outstanding principal amount of fifty million U.S. dollars (U.S.$50,000,000) or more, whether such indebtedness now exists or shall hereafter be created, which default has caused the holder of such indebtedness to declare such indebtedness to be due and payable prior to the date on which it would otherwise become or be due and payable and such acceleration is not rescinded or annulled within 10 days after the date of such acceleration; then, and in each and every such case which has occurred and is continuing, the Trustee may, in its discretion, and shall, upon the written request of the Holders of not less than 25% in principal amount of Debentures then outstanding, declare the principal of, together with accrued interest on all such Debentures and all other amounts payable hereunder to be due and payable immediately, by a notice in writing to the Corporation and the Guarantor (and to the Trustee if given by the Holders), and upon any such declaration such principal amount, together with accrued interest thereon, and such other amounts shall become immediately due and payable. SECTION 9.2 WAIVER. At any time after such a declaration of acceleration with respect to the Debentures has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided, the Holders of a majority in principal amount of Debentures then outstanding, by written notice to the Corporation and the Trustee, may thereupon rescind and annul such declaration and its consequences if the Corporation or the Guarantor has paid or deposited with the Trustee a sum sufficient to pay: (a) All overdue interest on all Debentures; (b) The principal of any of the Debentures which have become due otherwise than by such declaration of acceleration, and interest thereon from the date of such declaration at the rate prescribed therefor in the Debentures 55 -49- and all other moneys payable hereunder other then as a result of such declaration of acceleration; and (c) To the extent that payment of such interest is lawful and applicable, interest upon overdue instalments of interest at the rate prescribed therefor in such Debentures; and all Events of Default with respect to the Debentures, other than the non-payment of the principal of and interest on the Debentures which have become due solely by such declaration of acceleration, have been cured or waived in accordance with the provisions of this Indenture. SECTION 9.3 WAIVER OF DEFAULT OR BREACH. (1) The Holders of not less than a majority in principal amount of the Debentures then outstanding may on behalf of the Holders of all Debentures waive any past default hereunder with respect to the Debentures and its consequences, except a default: (a) In the payment of the principal of or interest on a Debenture; or (b) In respect of a covenant or provision hereof that under Article 13 cannot be modified or amended without the consent of the Holder of each Debenture then outstanding. (2) Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 9.4 OTHER REMEDIES. (1) If an Event of Default occurs and is continuing, the Trustee, upon being funded and indemnified to its reasonable satisfaction, may pursue any available remedy to collect the payment of principal of or interest on the Debentures or to enforce the performance of any term of the Debentures or this Indenture. (2) The Trustee may maintain a proceeding even if it does not possess any Debentures or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence to the Event of Default. SECTION 9.5 APPLICATION OF MONEY COLLECTED. Subject to Article 6, any money collected by the Trustee pursuant to this Article 9 shall be applied in the following order, at the dates fixed by the Trustee and, in case of 56 -50- the distribution of such money on account of principal or interest, upon presentation of Debentures and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: (a) First, to the payment of all amounts due to the Trustee under Section 14.7; (b) Second, to the payment of all amounts then due and unpaid for principal of and interest on the Debentures and other moneys payable hereunder in respect of which or for the benefit of which such money has been collected rateably, without preference or priority of any kind, according to the amounts due and payable on the Debentures for principal and interest, respectively (less any tax required by law to be deducted); and (c) Lastly, the surplus (if any) of such moneys shall be paid to the Corporation, the Guarantor or their respective assigns, unless otherwise required by law; provided, however, that no payment shall be made pursuant to Section 9.5(b) in respect of the principal or interest of any Debenture held, directly or indirectly, by or for the benefit of the Corporation or the Guarantor or any subsidiary or Affiliate thereof (other than any Debenture pledged for value and in good faith to a Person, other than the Corporation or the Guarantor or any of their subsidiaries or Affiliates, but only to the extent of such Person's interest therein), except subject to the prior payment in full of the principal and interest of all Debentures which are not so held. SECTION 9.6 CONTROL BY HOLDERS. Subject to Section 9.7, the Holders of at least a majority in principal amount of the Debentures then outstanding, may: (a) Direct the time, method and place (in Toronto, Ontario) of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it with respect to the Debentures, provided that the Trustee has been funded and indemnified to its reasonable satisfaction; and (b) Take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of Debentures under any provisions of this Indenture or under applicable law. SECTION 9.7 LIMITATION ON SUITS. (1) A Holder of Debentures may pursue a remedy with respect to this Indenture directly itself only if: (i) the Holder gives to the Trustee notice of a continuing Event of Default; (ii) the Holders of at least 25% in principal amount of the Debentures then outstanding make a request in writing to the Trustee to pursue 57 -51- the remedy; (iii) such Holder or Holders offer or provide to the Trustee funding and indemnity in form satisfactory to the Trustee against any loss, liability or expense; (iv) the Trustee does not comply with the request within 30 days after receipt of such request, funding and indemnity; and (v) during such 30-day period the Holders of a majority in principal amount of Debentures then outstanding do not give the Trustee a direction inconsistent with the request. (2) Holders may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. SECTION 9.8 RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on Debentures held by it, on or after the respective due dates expressed in the Debentures (or, in the case of redemption, on the Redemption Date), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder. SECTION 9.9 COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 9.1(a), Section 9.1(b), Section 9.1(c) or Section 9.1(f) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Corporation and/or the Guarantor for the whole amount of principal and interest remaining unpaid. SECTION 9.10 TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders lodged or allowed in any judicial proceedings relative to the Corporation, the Guarantor or their respective creditors or property. SECTION 9.11 UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defences made by the party litigant. This Section 9.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 9.7, or a suit by any Holder or group of Holders of more than 10% in principal amount of the Debentures then outstanding. 58 -52- SECTION 9.12 DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of Debentures to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article 9 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 9.13 REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to the Trustee or upon or to the Holders is intended to be exclusive of any other remedy, but each remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now existing or hereafter to exist by law or statute. SECTION 9.14 JUDGMENT AGAINST THE CORPORATION AND/OR THE GUARANTOR. The Corporation and the Guarantor covenants and agrees with the Trustee that, in case of any judicial or other proceedings to obtain judgment for payment of the principal of or interest on the Debentures, judgment may be rendered against either of them in favour of the Holders or in favour of the Trustee, as trustee for the Holders, for the amount which may remain due in respect of the Debentures and the interest thereon. SECTION 9.15 DISTRIBUTION OF PROCEEDS. Payments to Holders of Debentures pursuant to Section 9.5(b) shall be made as follows: (a) At least 10 days' notice of every such payment shall be given in the manner provided in Section 2.16 specifying the time when and the place or places where the Debentures are to be presented and the amount of the payment and the application thereof as between principal, interest and any other moneys payable hereunder; (b) Payment of any Debenture shall be made upon presentation thereof at any one of the places specified in such notice and any such Debenture thereby paid in full shall be surrendered, otherwise a memorandum of such payment shall be endorsed thereon; but the Trustee may in its discretion dispense with presentation and surrender or endorsement in any special case upon such indemnity being given as it shall deem sufficient; (c) From and after the date of payment specified in the notice, interest shall accrue only on the amount which remains unpaid on each Debenture after giving effect to the payment specified in such notice, unless such 59 -53- Debenture be duly presented on or after the date so specified and payment of such amount be not made; and (d) The Trustee shall not be required to make any interim payment to Debentureholders, unless the moneys in its hands, after reserving therefrom such amount as the Trustee may think necessary to provide for the payments mentioned in Section 9.5(a), exceed 5% of the principal amount of the Debentures. SECTION 9.16 IMMUNITY OF SHAREHOLDERS, ETC. The Debentureholders and the Trustee hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction against, any past, present or future incorporator, shareholder, director or officer (as such) of the Corporation for the payment of the principal or interest on any of the Debentures or on any covenant, agreement, representation or warranty by the Corporation herein or in the Debentures contained; provided, however, that nothing in this section shall prevent recourse to and the enforcement of liability of any such incorporator, shareholder, director or officer of the Corporation based upon the fraud of such incorporator, shareholder, director or officer. SECTION 9.17 TRUSTEE APPOINTED ATTORNEY. The Corporation hereby irrevocably appoints the Trustee to be the attorney of the Corporation for and in the name and on behalf of the Corporation to execute any instrument and do any acts and things which the Corporation ought to sign, execute and do hereunder and generally to use the name of the Corporation in the exercise of all or any of the powers hereby conferred on the Trustee, with full powers of substitution and revocation. ARTICLE 10 SATISFACTION AND DISCHARGE SECTION 10.1 CANCELLATION AND DESTRUCTION. All matured Debentures shall forthwith after payment thereof be delivered to the Trustee or to a Person appointed by it or by the Corporation with the approval of the Trustee and cancelled. All Debentures cancelled or required to be cancelled under this or any other provision of this Indenture may be destroyed by or under the direction of the Trustee by cremation or otherwise (in the presence of a representative of the Corporation, if the Corporation shall so require) and the Trustee shall prepare and retain a certificate of such destruction and deliver a duplicate thereof to the Corporation. 60 -54- SECTION 10.2 NON-PRESENTATION OF DEBENTURES. If the Holder of any Debenture fails to present its Debenture for payment on the date on which the principal thereof or represented thereby becomes payable at maturity or otherwise or fails to accept payment on account thereof in cash or Exchangeable Shares issued and delivered pursuant to the provisions hereof or give such receipt therefor, if any, as the Trustee may require: (a) The Corporation shall be entitled to pay or issue and deliver, as the case may be, to the Trustee and direct it to set aside; or (b) In respect of moneys in the hands of the Trustee which may or should be applied to the payment of the Debentures, the Corporation shall be entitled to direct the Trustee to set aside; the principal and interest, or the Exchangeable Shares, as the case may be, in trust to be paid or delivered, as the case may be, without interest to the Holder of such Debenture, upon due presentation and/or surrender thereof in accordance with the provisions of this Indenture; and thereupon the principal and interest payable on or represented by each Debenture in respect whereof such moneys or Exchangeable Shares have been set aside shall be deemed to have been paid and the Holder thereof shall thereafter have no right in respect thereof, except that of receiving payment of the moneys or the Exchangeable Shares so set aside by the Trustee upon due presentation and/or surrender thereof, subject always to the provisions of Section 10.3. SECTION 10.3 REPAYMENT OF UNCLAIMED MONEYS OR EXCHANGEABLE SHARES TO CORPORATION. Any moneys or Exchangeable Shares in the hands of the Trustee and set aside under Section 10.2 and not claimed by and paid or delivered as provided in Section 10.2, to Holders of Debentures within five years after the date of such setting aside shall be repaid or delivered to the Corporation by the Trustee on demand, and thereupon the Trustee shall be released from all further liability with respect to such moneys and Exchangeable Shares and thereafter the Holders of the Debentures in respect of which such moneys and Exchangeable Shares were so repaid or delivered to the Corporation shall have no rights in respect thereof, except to obtain payment of the moneys or delivery of the Exchangeable Shares (or, after redemption or purchase of the Exchangeable Shares pursuant to their terms or to the terms of the Plan, AMVESCAP Ordinary Shares) due thereon from the Corporation. SECTION 10.4 RELEASE FROM COVENANTS. Upon Written Request and proof being given to the reasonable satisfaction of the Trustee that the principal of all the Debentures and interest thereon and other moneys payable hereunder have been paid or satisfied or that all the Debentures then outstanding have matured and that the payment or satisfaction of all principal thereof, 61 -55- interest thereon and other moneys payable has been duly and effectually provided for, and upon payment of all costs, charges and expenses properly incurred by the Trustee hereunder and all interest thereon and the remuneration of the Trustee, or upon provision satisfactory to the Trustee being made therefor, the Trustee shall, at the request and at the expense of the Corporation, execute and deliver to the Corporation and the Guarantor such deeds or other instruments as shall be requisite to release the Corporation and the Guarantor from the terms of this Indenture and the Debentures, except those relating to the indemnification of the Trustee. ARTICLE 11 MERGER, AMALGAMATION, CONSOLIDATION, CONVEYANCE, TRANSFER OR LEASE SECTION 11.1 AMALGAMATION AND CONSOLIDATION OF CORPORATION AND CONVEYANCES PERMITTED SUBJECT TO CERTAIN CONDITIONS. Neither the Corporation nor the Guarantor will consummate any transaction (whether by way of merger, amalgamation, consolidation, reorganization or arrangement (except with one or more of its wholly-owned subsidiaries)) or effect any conveyance, transfer, lease, sale or otherwise of all or substantially all of its undertaking or assets, unless in any such case: (a) It shall be the continuing corporation, or the successor corporation (or the Person that leases or that acquires by conveyance, sale or transfer all or substantially all of the assets of the Corporation or the Guarantor, as the case may be) (such corporation or Person being referred to as the "SUCCESSOR CORPORATION") shall expressly, by supplemental indenture executed and delivered to the Trustee by such Successor Corporation, assume and become bound by the obligations of the Corporation or the Guarantor, as applicable, under this Indenture, including without limitation the due and punctual payment of the principal of and interest on all Debentures then outstanding, according to their tenor, and other moneys payable hereunder and the due and punctual performance and observance of all the covenants and conditions of this Indenture to be performed by the Corporation or the Guarantor, as applicable; and (b) It or such Successor Corporation, as the case may be, shall not immediately thereafter be in default under this Indenture or the Debentures. SECTION 11.2 OFFICERS' CERTIFICATE AND OPINION OF COUNSEL. The Trustee may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any such merger, amalgamation, reorganization, arrangement, 62 -56- lease, transfer, sale or conveyance, and any such assumption, comply with the provisions of this Article 11. SECTION 11.3 VESTING OF POWERS IN SUCCESSOR. Whenever the conditions of Section 11.1 have been duly observed and performed, the Successor Corporation shall succeed to and be substituted for the Corporation or the Guarantor, as the case may be, and shall agree to be bound by the terms of this Indenture as principal obligor in place of the Corporation or as guarantor in place of the Guarantor, as applicable, with the same effect as if the Successor Corporation had been named herein and the Successor Corporation shall possess and from time to time may exercise each and every right and power of the Corporation or the Guarantor, as the case may be, under this Indenture in the name of the Corporation or the Guarantor, as applicable, or otherwise and any act or proceeding by any provisions of this Indenture required to be done or performed by any directors or officers of the Corporation or the Guarantor, as the case may be, may be done and performed with like force and effect by the like directors or officers of such Successor Corporation. SECTION 11.4 EXECUTION OF SUPPLEMENTAL INDENTURE. Upon being satisfied that the conditions of Section 11.1 have been duly observed and performed by delivery of an Officers' Certificate and an Opinion of Counsel as provided in Section 11.2, the Trustee shall execute any supplemental indenture required, as provided in Article 13. ARTICLE 12 MEETINGS OF DEBENTUREHOLDERS SECTION 12.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of Debentureholders may be called at any time and from time to time pursuant to this Article 12 to make, give or take any Act provided by this Indenture to be made, given or taken by Holders of Debentures. SECTION 12.2 CALL, NOTICE AND PLACE OF MEETINGS. (1) The Trustee may at any time and from time to time and shall, on receipt of a requisition in writing made by the Corporation or by the Holders of at least 10% in principal amount of the Debentures then outstanding, which requisition shall set forth in reasonable detail the action proposed to be taken at such meeting, and upon being funded and indemnified to its reasonable satisfaction by the Corporation or the Holders making such requisition, as the case may be, against the costs which may be incurred in connection with the calling and holding of such meeting, call a meeting of Debentureholders for any purpose specified in Section 12.1, to be held at such time and at such place in Toronto, Ontario, as the 63 -57- Trustee shall determine. Notice of every meeting of Debentureholders, setting forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 2.16, not less than 21 nor more than 50 days prior to the date fixed for the meeting. (2) If, pursuant to Section 12.2(1), the Corporation or Debentureholders have requested the Trustee to call a meeting of Debentureholders, and the Trustee shall not have made the first publication, or mailing, as the case may be, of notice of such meeting within 21 days after receipt of such request and funding and indemnity or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Corporation or such Debentureholders, as the case may be, may determine the time and the place in Toronto, Ontario for such meeting and may call such meeting for such purposes by giving notice thereof as provided in Section 12.2(1). SECTION 12.3 PERSONS ENTITLED TO VOTE AT MEETINGS. To be entitled to vote at any meeting of Debentureholders, a Person shall be: (i) a Holder of one or more Debentures then outstanding; or (ii) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Debentures then outstanding by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Debentureholders shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Corporation or the Guarantor and their counsel. SECTION 12.4 QUORUM; ACTION. (1) The Persons entitled to vote at least 25% in principal amount of the Debentures then outstanding shall constitute a quorum for a meeting of Debentureholders. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Debentureholders, be dissolved. In the absence of a quorum in any other case the meeting shall be adjourned to be reconvened at the same time and place on the fifth Business Day following date of the meeting. At the reconvened meeting, the Debentureholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened notwithstanding that they may not represent 25% of the principal amount of the outstanding Debentures. No notice of the reconvening of any adjourned meeting shall be given. (2) Except as limited by the proviso to Section 13.2(1), any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of Debentures represented at the meeting and voted on such resolution; provided, however, that, except as limited by the 64 -58- proviso to Section 13.2(1), any resolution with respect to any Act that this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage in principal amount of Debentures then outstanding may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of Debentures then outstanding. (3) Any resolution passed or decision taken at any meeting of Holders of Debentures duly held in accordance with this section will be binding on all Holders of Debentures, whether or not present or represented at the meeting. SECTION 12.5 DETERMINATION OF VOTING RIGHTS; CHAIRMAN; CONDUCT AND ADJOURNMENT OF MEETINGS. (1) Notwithstanding any other provisions of this Indenture, the Trustee or the Corporation, with the approval of the Trustee, may make and from time to time may vary such reasonable regulations as it may deem advisable for any meeting of Debentureholders in regard to proof of the holding of Debentures and the appointment of proxies and in regard to the appointment of scrutineers, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. (2) The Trustee shall, by an instrument in writing, appoint a chairman and secretary of the meeting, unless the meeting shall have been called by the Corporation in which case the Corporation shall, by an instrument in writing, appoint a chairman and secretary. (3) At any meeting of Debentureholders, each Holder of a Debenture or proxy shall be entitled to one vote for each one thousand Dollars ($1,000) principal amount of Debentures held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Debentures challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Debenture or proxy. (4) Any meeting of Debentureholders duly called pursuant to Section 12.2 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of Debentures then outstanding represented at the meeting; and the meeting may be held as so adjourned without further notice. SECTION 12.6 COUNTING VOTES AND RECORDING ACTION OF MEETINGS. The vote upon any resolution submitted to any meeting of Debentureholders shall be by written ballots on which shall be inscribed the signatures of the 65 -59- Debentureholders or of their representatives by proxy and the principal amounts and serial numbers of Debentures then outstanding held or represented by them. The chairman of the meeting shall appoint two scrutineers of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record, at least in duplicate, of the proceedings of each meeting of Debentureholders shall be prepared by the secretary of the meeting and there shall be attached to such record the original reports of the scrutineers of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that such notice was given as provided in Section 12.2. Each copy shall be signed and verified by the affidavits of the chairman and secretary of the meeting and one such copy shall be delivered to the Corporation, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. ARTICLE 13 SUPPLEMENTAL INDENTURES SECTION 13.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without the consent of any Holders, the Corporation, when authorized by a Board Resolution, the Guarantor, when duly authorized, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, in its sole discretion, for any of the following purposes: (a) To evidence the succession of another corporation to the Corporation or the Guarantor, and the assumption by such successor of the covenants and obligations herein of the Corporation or of the Guarantor, respectively, and in the Debentures; (b) Adding to the provisions hereof such additional covenants, enforcement provisions, release provisions and other provisions as, in the Opinion of Counsel, are necessary or advisable in the premises, provided that the same, in the Opinion of Counsel, are not prejudicial to the interests of the Debentureholders; (c) To add any additional Events of Default; (d) To evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Debentures; (e) To cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to 66 -60- make any other provisions with respect to matters or questions arising under this Indenture that shall not be inconsistent with any provisions of this Indenture, provided such other provisions shall not, in the Opinion of Counsel to the Trustee, adversely affect the interests of the Holders of Debentures in any material respect; (f) Making any modification of any of the provisions of this Indenture or the Debentures which is of a formal, minor or technical nature; (g) Making any additions to, deletions from or alterations of the provisions of this Indenture (including any of the terms and conditions of the Debentures) which, in the Opinion of Counsel to the Trustee, are not prejudicial to the interests of the Debentureholders and which are necessary or advisable in order to incorporate, reflect or comply with any legislation the provisions of which apply to this Indenture; (h) Adding to or altering the provisions hereof in respect of the transfer or exchange of the Debentures and making any modification in the form of the Debentures which does not affect the substance thereof and which, in the opinion of the Trustee, is not prejudicial to the interests of the Debentureholders; (i) Correcting or rectifying any ambiguities, defective provisions, errors or omissions herein, provided that, in the Opinion of Counsel to the Trustee, the rights of the Trustee and the Debentureholders are in no way prejudiced thereby; and (j) Any other purpose not inconsistent with the terms of this Indenture provided that, in the Opinion of Counsel to the Trustee, the rights of the Trustee and of the Debentureholders are in no way prejudiced thereby. SECTION 13.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. (1) With the consent of the Holders of not less than a majority in aggregate principal amount of the Debentures represented at any meeting of Debentureholders duly called and held in accordance with the provisions of Article 12, or by Act of the Holders of not less than a majority in aggregate principal amount of the Debentures then outstanding delivered to the Corporation and the Trustee, the Corporation, when authorized by a Board Resolution, the Guarantor when duly authorized and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Debenture then outstanding and so affected: 67 -61- (a) Change the Maturity Date of the principal of, or any instalment of interest on, the Debentures, or reduce the principal amount thereof or the interest thereon or change any place of payment, or change the currency in which the Debentures or interest thereon is payable or modify or alter the rights of the Holders to convert the Debentures into Exchangeable Shares, or impair the right to institute a suit for the enforcement of any such payment on or after the Maturity Date thereof (or, in the case of redemption, on or after the Redemption Date); (b) Reduce the percentage in principal amount of the Debentures then outstanding, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture, or reduce the requirements of Section 12.4 for quorum or Section 12.5 for voting; or (c) Modify any provision of Section 8.1(d) or Section 8.4 regarding the annual delivery of an Officers' Certificate, or modify any provisions of this Section or Section 9.3 except to increase any percentage referred to in this Section or Section 9.3 or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Debenture then outstanding. (2) It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 13.3 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article 13 or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and subject to Section 14.1, shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, is not inconsistent herewith, is a valid and binding obligation of the Corporation, enforceable in accordance with its terms, subject to enforceability being limited by bankruptcy, insolvency or other laws affecting the enforcement of creditor's rights generally and equitable remedies including the remedies of specific performance and injunction being granted only in the discretion of a court of competent jurisdiction and other qualifications that are customary in the circumstances and, in connection with a supplemental indenture executed pursuant to Section 13.1, that the Trustee is authorized to execute and deliver such supplemental indenture without the consent of the Holders and, in connection with a supplemental indenture executed pursuant to 68 -62- Section 13.2, that the requisite consent of the Holders has been validly obtained in accordance with Section 13.2. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 13.4 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article 13, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Debentures theretofore authenticated and delivered under this Indenture shall be bound by such supplemental indenture. ARTICLE 14 CONCERNING THE TRUSTEE SECTION 14.1 DUTIES OF TRUSTEE. (1) The Trustee in exercising its powers and discharging its duties hereunder shall: (a) Act honestly and in good faith with a view to the best interests of the Debentureholders; and (b) Exercise the care, diligence and skill of a reasonably prudent trustee. (2) The Trustee need perform only those duties that are specifically set forth in this Indenture and no others. (3) In the absence of bad faith on its part, the Trustee may conclusively act and rely, as to the truth of the statement and the correctness of the opinions expressed therein, upon statutory declarations, certificates, opinions or reports furnished to the Trustee and complying with the requirements of this Indenture. (4) Every provision of this Indenture that in any way relates to the Trustee is subject to the above paragraphs of this section. The Trustee may refuse to perform any duty or exercise any right or power unless it receives funding and indemnity reasonably satisfactory to it for actions taken under this Indenture. The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Corporation. (5) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. 69 -63- (6) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any personal financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers. SECTION 14.2 RIGHTS OF TRUSTEE. (1) The Trustee may act and rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance thereon. The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. The Trustee shall not be liable for any action it takes or omits to take in good faith, except as otherwise provided in this Indenture, which it reasonably believes to be authorized or within its rights or powers. (2) Any order, request or direction of the Corporation mentioned herein shall be sufficiently evidenced by a written request or order signed in the name of the Corporation by any authorized officer and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution. (3) Whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate, including (i) as to any statements of fact, as evidence of the truth of such statements, and (ii) to the effect that any particular dealing or transaction or step or thing is, in the opinion of the officers so certifying, expedient, as evidence that it is expedient; provided that the Trustee may in its sole discretion require from the Corporation or otherwise further evidence or information before acting or relying on such certificate. (4) The Trustee may employ or retain such agents, Counsel, accountants and other assistants (at the Corporation's expense) as it may reasonably require for the proper determination and discharge of duties hereunder and may pay reasonable remuneration for all services performed for it. (5) The Trustee may, in relation to this Indenture, act and rely on the opinion or advice of or on information obtained from any Counsel, notary, valuer, surveyor, engineer, broker, auctioneer, accountant or other expert, whether retained, employed or appointed by the Trustee or by the Corporation or otherwise and shall not be responsible for any loss occasioned by such act or reliance unless such act or reliance was taken in bad faith or constituted gross negligence or 70 -64- wilful misconduct. The fees of such Counsel or other experts shall be added to and be part of the Trustee's fees hereunder. (6) The Trustee may consult with Counsel and written advice of such Counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (7) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered and furnished to the Trustee funds for the purpose and reasonable indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (8) Prior to the occurrence of an Event of Default with respect to the Debentures and after the occurrence of, during the continuance of or after the waiving of all such Events of Default which may have occurred, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document, or any investigation of the books and records of the Corporation (but the Trustee, in its discretion, may make such further inquiry or investigation and shall be entitled to examine the books, records and premises of the Corporation, personally or by agent or attorney), unless requested to do so by the Act of the Holders of a majority in aggregate principal amount of the Debentures then outstanding; provided, however, that the Trustee may require reasonable funding and indemnity against the cost, expenses or liabilities likely to be incurred by it in the making of such investigation. (9) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. (10) Nothing herein contained shall impose any obligation on the Trustee to see or to require evidence of registration or filing (or renewals thereof) of this Indenture or any instrument ancillary or supplemental hereto. (11) The Trustee shall not be bound to give any notice of the execution hereof. (12) The Trustee shall not incur any liability or responsibility whatever or be in any way responsible for the consequence of any breach on the part of the Corporation 71 -65- or the Guarantor of any of the covenants herein contained or of any act of the agents or servants of the Corporation or the Guarantor. (13) The Trustee shall not be liable for the price at which Exchangeable Shares are sold pursuant to the provisions of this Indenture, the timing of such sales or the failure to effect such sales, provided that it acts in accordance with Section 14.1 and follows the directions of the Corporation in undertaking such sales. (14) The Trustee (i) shall be entitled to act and rely on any Officers' Certificate it receives pursuant to Section 5.6(4); (ii) shall not at any time be under any duty or responsibility to any Debentureholder to determine whether any facts exist which may require any adjustment to the AMVESCAP Share Rate or revision to the Current Market Price, or with respect to the nature or extent of any such adjustment or revision when made, or with respect to the method employed in making such adjustment or revision; (iii) shall not be accountable with respect to the validity or value (or the kind or amount) of any Exchangeable Shares or of any other shares or securities or property which may at any time be issued or delivered upon the conversion of any Debenture or the exercise of the Share Redemption Right or the Share Repayment Right; and (iv) shall not be responsible for any failure of the Corporation to make any cash payment or to issue, transfer or deliver Exchangeable Shares upon the conversion of any Debenture or the exercise of the Share Redemption Right or the Share Repayment Right. SECTION 14.3 DOCUMENTS, MONEYS, ETC., HELD BY TRUSTEE. Any securities, documents of title or other instruments that may at any time be held by the Trustee subject to the trusts hereof may be placed in the deposit vaults in the Province of Ontario of the Trustee or of any Canadian chartered bank (a "QUALIFIED INSTITUTION"), including, without limitation, the Canadian Imperial Bank of Commerce, or deposited for safekeeping in the Province of Ontario with any such bank. Unless herein otherwise expressly provided, any moneys so held, pending the application or withdrawal thereof under any provision of this Indenture, may be deposited in the name of the Trustee in any Canadian chartered bank at the rate of interest (if any) then current on similar deposits or, (i) with the consent of the Corporation, may be deposited in the deposit department of the Trustee or any other loan or trust corporation authorized to accept deposits under the laws of Canada or a province thereof, or (ii) at the written direction of the Corporation, the Trustee shall invest or reinvest such monies in short term interest bearing or discount debt obligations issued or guaranteed by the Government of Canada or any province thereof or a Canadian chartered bank (which may include an Affiliate or related party of the Trustee), maturing not more than one year from the date of investment, provided that each such obligation is rated at least R1 (middle) by DBRS Inc. or any equivalent rating by Canadian Bond Rating Service (an "AUTHORIZED INVESTMENTS"). Any direction by the Corporation to the Trustee as to 72 -66- investment or reinvestment of funds shall be in writing and shall be provided to the Trustee no later than 9:00 a.m. (local time) on the day on which the investment is to be made. Any such direction received after 9:00 a.m. (local time) or received on a non-Business Day, shall be deemed to have been given prior to 9:00 a.m. (local time) the immediately following Business Day. If no such direction is received, the Trustee shall not have any obligation to invest the monies in Authorized Investments and pending receipt of such a direction shall be entitled to hold such monies uninvested in a trust account. The Trustee shall not be held liable for any losses incurred in the investment of any funds in Authorized Investments. All interest or other income received by the Trustee in respect of such deposits and investments shall belong to the Corporation and shall be remitted to the Corporation upon request five years from Maturity Date, unless an Event of Default shall have occurred and be continuing, in which case all such interest and income shall be held by the Trustee and applied in accordance with Section 9.5. SECTION 14.4 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Debentures and may otherwise deal with the Corporation and the Guarantor with the same rights it would have if it were not Trustee. Any agent of the Trustee may do the same with like rights. However, the Trustee is at all time subject to Section 14.1 and Section 14.10. SECTION 14.5 TRUSTEE'S DISCLAIMER. The Trustee makes no representation as to the validity or adequacy of the Debentures, it shall not be accountable for the Corporation's use of the proceeds from Debentures, and it shall not be responsible for any statement with respect to the Debentures other than its certificate of authentication. SECTION 14.6 DISCRETION OF TRUSTEE. Subject to Section 14.1, unless and until it shall have been required to do so under the terms hereof, the Trustee shall not be bound to do or take any act, action or proceeding in virtue of the powers conferred on it hereby; nor shall the Trustee be required to take notice of any Event of Default hereunder, other than in payment of any moneys required by any provision hereof to be paid to it or where it has actual knowledge thereof, unless and until notified in writing of such Event of Default (which notice shall distinctly specify the Event of Default desired to be brought to the attention of the Trustee) and in the absence of any such notice and subject as aforesaid, the Trustee may for all purposes of this Indenture conclusively assume that the Corporation is not in default hereunder and that no Event of Default has been made with respect to the payment of principal and interest on the Debentures, or in the observances or performance of any of the covenants, agreements or conditions contained herein. Subject to Section 14.1, and except as otherwise herein stated, any such notice or requisition shall in no way limit any discretion herein given to the Trustee to determine 73 -67- whether or not the Trustee shall take action with respect to any Event of Default or take action without any such notice or requisition. The Trustee may, before commencing or at any time during the continuance of any such action, require the Holders at whose instance it is acting to deposit with the Trustee the Debentures held by them, for which Debentures the Trustee shall issue receipts. SECTION 14.7 COMPENSATION AND INDEMNITY. (1) The Corporation shall pay to the Trustee from time to time compensation for its services hereunder as agreed separately by the Corporation and the Trustee, and shall pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in the administration or execution of its duties under this Indenture (including the reasonable and documented compensation and disbursements of its Counsel and all other advisers and assistants not regularly in its employ), both before any default hereunder and thereafter until all duties of the Trustee under this Indenture shall be finally and fully performed. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. (2) The Corporation hereby indemnifies and saves harmless the Trustee and its directors, officers, employees and agents against any loss, damages, charges, expenses, claims, actions or liability whatsoever which the Trustee suffers or incurs as a result of or arising out of its duties and obligations hereunder. The foregoing provisions of this Section do not apply to the extent that in any circumstances there has been a failure by the Trustee or its employees to act honestly and in good faith or to discharge the Trustee's obligations under Section 14.1(1). This indemnity will survive the termination or discharge of this Indenture and the resignation or removal of the Trustee. The Trustee shall notify the Corporation promptly of any claim for which it may seek indemnity. The Corporation shall defend the claim and the Trustee shall co-operate in the defence. The Trustee may have separate Counsel and the Corporation shall pay the reasonable fees and expenses of such Counsel. The Corporation need not pay for any settlement made without its consent, which consent must not be unreasonably withheld. (3) Any amount due under this Section 14.7 and unpaid 30 days after demand for such payment shall bear interest from the expiration of such 30 days, at the rate normally charged by the Trustee on overdue accounts. Such amount shall continue to be payable after the occurrence of an Event of Default and until the trusts hereof shall be finally wound up and whether or not the trusts of this Indenture shall be in the course of administration by or under the direction of the court. 74 -68- SECTION 14.8 REPLACEMENT OF TRUSTEE. (1) A resignation or removal of the Trustee and appointment of a successor trustee shall become effective only upon the successor trustee's acceptance of appointments as provided in this section. (2) The Trustee may resign at any time with respect to the Debentures by giving written notice thereof to the Corporation who shall appoint a successor trustee within 30 days. If an instrument of acceptance by a successor shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee, at the Corporation's expense, may petition any court of competent jurisdiction for the appointment of a successor trustee. The Holders of not less than a majority in principal amount of the Debentures then outstanding may remove the Trustee by so notifying the Trustee and the Corporation. If: (i) the Trustee fails to comply with Section 14.1 or Section 14.10; (ii) the Trustee is adjudged to be bankrupt or insolvent; (iii) a receiver or public officer takes charge of the Trustee or its property; or (iv) the Trustee becomes incapable of acting, then, in any such case, the Corporation by a Board Resolution may remove the Trustee. (3) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason with respect to the Debentures, the Corporation shall promptly appoint a successor trustee with respect to the Debentures and shall comply with the applicable requirements of this Section 14.8. Within one year after the successor trustee takes office, the Holders of a majority in principal amount of Debentures then outstanding may appoint a successor trustee to replace the successor trustee appointed by the Corporation. If a successor trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Corporation or the Holders of not less than 10% in principal amount of the Debentures then outstanding may petition any court of competent jurisdiction for the appointment of a successor trustee with respect to the Debentures. (4) The Corporation shall give notice to the Debentureholders of each resignation and each removal of the Trustee with respect to the Debentures and each appointment of a successor trustee with respect to the Debentures in the manner provided in Section 2.16. Each notice shall include the name of the successor trustee with respect to the Debentures and its address. (5) In the case of an appointment hereunder of a successor trustee with respect to the Debentures, every such successor trustee so appointed shall execute, acknowledge and deliver to the Corporation and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor trustee, 75 -69- without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but on request of the Corporation or the successor trustee, such retiring Trustee shall, upon payment of its charges and any other amount owing to it hereunder, execute and deliver an instrument transferring to such successor trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor trustee all property and money held by such retiring Trustee hereunder. (6) Upon request of any such successor trustee, the Corporation shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor trustee all such rights, powers and trusts referred to in Section 14.8(5). (7) No successor trustee shall accept its appointment unless at the time of such acceptance such successor trustee shall be qualified and eligible under this Article 14. SECTION 14.9 SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor trustee. SECTION 14.10 ELIGIBILITY; DISQUALIFICATION. This Indenture shall always have a Trustee who satisfies the requirements of Part V of the Business Corporations Act (Ontario). The Trustee represents to the Corporation that at the date of the execution and delivery of this Indenture no material conflict of interest exists in the Trustee's role as a fiduciary hereunder and agrees that in the event of a material conflict of interest arising hereafter the Trustee shall, within 90 days after ascertaining that such a material conflict of interest exists, either eliminate such material conflict of interest or resign its trust hereunder. If any such material conflict of interest exists or hereafter shall exist, the validity and enforceability of this Indenture and the Debentures shall not be affected in any manner whatsoever by reason thereof. SECTION 14.11 ACCEPTANCE OF TRUST. The Trustee hereby accepts the trusts in this Indenture declared, created or constituted and provided for and agrees to perform the same upon the terms and conditions herein set forth. SECTION 14.12 ADDITIONAL EVIDENCE. In addition to the reports, certificates, opinions and other evidence required by this Indenture, the Corporation shall furnish to the Trustee such additional evidence of compliance with any provision hereof in such form as may be prescribed by applicable 76 -70- legislation or as the Trustee may reasonably require by written notice to the Corporation. SECTION 14.13 DEPOSIT OF DEBENTURES. The Trustee may, before commencing or at any time during the continuance of any act, action or proceeding taken pursuant to this Indenture, require the Debentureholders, at whose instance it is acting, to deposit with the Trustee the Debentures held by them, for which Debentures the Trustee shall issue receipts. IN WITNESS WHEREOF the parties have executed this Indenture. CIBC MELLON TRUST COMPANY By: /s/ MAXINE MCDONALD -------------------------------------- Name: Maxine McDonald Title: Senior Manager, Client Relations By: /s/ JEFFERY CARRABS -------------------------------------- Name: Jeffery Carrabs Title: Manager, Client Relations AMVESCAP INC. By: /s/ ROBERT HAIN -------------------------------------- Authorized Signing Officer AMVESCAP PLC By: /s/ ROBERT F. MCCULLOUGH -------------------------------------- Authorized Signing Officer 77 SCHEDULE "A" FORM OF DEBENTURE CUSIP 03235K AA 4 NO. o AMVESCAP INC. $o INCORPORATED UNDER THE COMPANIES ACT (NOVA SCOTIA) AMVESCAP EQUITY SUBORDINATED DEBENTURES AMVESCAP Inc. (the "CORPORATION"), for value received, hereby acknowledges itself indebted and promises to pay to the order of the registered holder hereof as set out on the reverse hereof, on the third anniversary of the date hereof (the "MATURITY DATE"), or on such earlier date as the principal amount hereof may become due in accordance with the provisions of the Indenture hereinafter mentioned, the principal sum of o DOLLARS($o) in lawful money of Canada, on presentation and surrender of this Debenture at the principal office of CIBC Mellon Trust Company in the City of Toronto, and to pay interest on the principal amount hereof at the rate of 6.00% per annum from the date hereof or from the most recent Interest Payment Date to which interest has been paid or made available for payment on the Debentures then outstanding, whichever is later, in like money in equal semi-annual instalments in arrears, commencing six months after the date hereof with overdue interest, if any, at the same rate after as well as before maturity and after as well as before default in payment of principal or interest. As interest on this Debenture becomes due, the Corporation (except in case of payment of interest at maturity or on redemption or conversion, at which time payment of interest, less any tax required by law to be deducted or withheld, will be made upon surrender of this Debenture) shall forward or cause to be forwarded by courier or ordinary post to the registered address of the registered holder of the Debenture for the time being, or in the case of joint holders to the registered address of one of such joint holders, a cheque for such interest, less any tax required by law to be deducted or withheld, if any, payable to the order of such holder or holders and negotiable at par. The forwarding of such cheque shall satisfy and discharge the liability for interest on this Debenture to the extent of the sum represented thereby (plus the amount of any tax deducted or withheld as aforesaid), unless such cheque be not paid on presentation. This Debenture is one of the AMVESCAP Equity Subordinated Debentures (the "DEBENTURES") issued under an Indenture (the "INDENTURE") dated the date hereof and made among the Corporation, CIBC Mellon Trust Company, as trustee (the "TRUSTEE") and AMVESCAP PLC, as guarantor ("GUARANTOR"). Reference is hereby made to the Indenture for a description of the rights of the Holders of the Debentures, the Corporation, the Guarantor and the Trustee and of the terms and conditions upon which the Debentures are 78 -2- issued and held, all to the same effect as if the provisions of the Indenture were herein set forth, to all of which provisions the Holder of this Debenture, by acceptance hereof, assents. To the extent that the terms and conditions stated in this Debenture conflict with the terms and conditions of the Indenture, the latter prevails. All capitalized terms used herein have the meanings ascribed thereto in the Indenture unless otherwise indicated. The Debentures are issuable as fully registered Debentures in denominations of $1,000 and integral multiples of $1,000. The Debentures of any authorized denomination may be exchanged, as provided in the Indenture, for Debentures of the same aggregate principal amount in any other authorized denomination. This Debenture and all other Debentures certified and issued under the Indenture rank pari passu with one another, in accordance to their tenor without discrimination, preference or priority. The payment of all amounts owing under the Indenture including, without limitation, the principal of and interest on the Debentures is subordinated to the prior payment in full of Senior Liabilities as provided in Article 6 of the Indenture. The Indenture does not restrict the Corporation from incurring additional Indebtedness for borrowed money or from mortgaging, pledging or charging its properties to secure any Indebtedness. At any time before the Maturity Date the Corporation may, upon at least 20 days' and not more than 30 days' notice, conditionally or unconditionally redeem all, but not less than all, of the Debentures outstanding on a date chosen by the Corporation for redemption (the "REDEMPTION DATE") upon payment in lawful money of Canada of an amount, for each $1,000 principal amount of Debentures to be redeemed, equal to the aggregate of (i) $1,200; plus (ii) all accrued and unpaid interest on each such $1,000 principal amount to but excluding the Redemption Date (collectively, the "REDEMPTION AMOUNT"). The Corporation may satisfy the Redemption Amount in cash or by the delivery of that number of Freely Tradeable Exchangeable Shares obtained by dividing the Redemption Amount by 95% of the Current Market Price of an AMVESCAP Ordinary Share on the date of the Redemption Notice. The Corporation may only exercise its right to conditionally redeem all of the outstanding Debentures if there is an Offer (that is a take-over bid or issuer bid to purchase AMVESCAP Ordinary Shares or any other transaction which has a similar effect) and if the only condition to the Corporation's exercise of its right to redeem all of the outstanding Debentures is the completion of such Offer. Each Debentureholder has the right at its option, at any time and from time to time, to convert its Debentures into Exchangeable Shares. In order to exercise this right to convert, a Debentureholder is required to deliver to the Trustee a conversion notice (the "CONVERSION NOTICE") in the form attached to this Debenture, together with this Debenture, and to specify in such notice the date on which such Debentureholder wants such conversion to be effective, which date shall be not less than four Business Days and not more than 15 Business Days from the day the Trustee receives such Conversion Notice. Each $1,000 principal amount of Debentures is convertible into that number of Exchangeable Shares equal to the Conversion Number in effect on the date the Trustee 79 -3- receives the applicable Conversion Notice. The Conversion Number will be calculated as (i) the Conversion Value (being the lesser of the AMVESCAP Share Value and $1,200) divided by (ii) the Current Market Price of an AMVESCAP Ordinary Share on the date the Trustee receives the applicable Conversion Notice. The AMVESCAP Share Value will be equal to the AMVESCAP Share Rate multiplied by the Current Market Price of an AMVESCAP Ordinary Share on the date the Trustee receives the applicable Conversion Notice. The AMVESCAP Share Rate is subject to adjustment upon the occurrence of certain events specified in the Indenture. The Corporation has the option by notifying the Trustee and the Holder, in lieu of delivering Exchangeable Shares upon a conversion of Debentures, to pay the Conversion Value of the Debentures tendered for conversion in cash. The Corporation will send to the Holders of Debentures, at least 10 Business Days and not more than 20 Business Days prior to the maturity of the Debentures, a notice (the "MATURITY NOTICE") which will provide such Holders with the following options: (a) to convert their Debentures to Exchangeable Shares, only if the AMVESCAP Share Value at maturity is greater than or equal to $1,000, subject to the right of the Corporation to pay the Conversion Value in cash; (b) to convert their Debentures to Exchangeable Shares, whether or not the AMVESCAP Share Value at maturity exceeds $1,000, subject to the right of the Corporation to pay the Conversion Value in cash; or (c) to receive payment of the principal amount of the Debentures in cash, subject to the exercise by the Corporation of the Share Repayment Right; it being understood, in each case, that the accrued interest, if any, shall be paid in cash. In order to select one of the options, Debentureholders will be required to deliver to the Trustee before the close of business (in the City of Toronto, Ontario) on the Business Day that is three Business Days prior to maturity (the "DETERMINATION DATE") a duly completed exercise notice in prescribed form. Holders of Debentures who do not deliver a duly completed exercise notice at or before the close of business (in the City of Toronto, Ontario) on the Determination Date will be deemed to have selected option (a) and, unless the Corporation has exercised its right to pay the Conversion Value in cash, the Debentures held by such Holders will automatically be converted into Exchangeable Shares, if the AMVESCAP Share Value at maturity is greater than or equal to $ 1,000. The Corporation shall specify in the Maturity Notice whether it will deliver Exchangeable Shares on conversion of the Debentures or, in lieu of delivering Exchangeable Shares on conversion, elects to pay the Conversion Value in cash for Debentures tendered for conversion under option (a) or (b), and whether, if the Holder selects option (c), the Corporation, in lieu of paying cash on maturity, elects to exercise the Share Repayment Right and deliver Exchangeable Shares. 80 -4- No fractional Exchangeable Shares will be delivered to the holders of Debentures upon conversion, if the Redemption Amount is satisfied by the delivery of Exchangeable Shares or if the Corporation exercises the Share Repayment Right, but in lieu thereof, the Corporation will make an equivalent cash payment. Subject to regulatory requirements and provided no Event of Default has occurred and is continuing, the Corporation may purchase Debentures in the open market or by tender or private contract at any price. Debentures purchased or redeemed by the Corporation shall be cancelled and shall not be reissued. In all cases, if taxes are required to be deducted or withheld from a payment in cash payable to a Holder or from Exchangeable Shares to be delivered to a Holder (including, without limitation, Exchangeable Shares issued as a result of the conversion of a Debenture at the option of the Holder or as a result of the redemption of a Debenture before maturity at the option of the Corporation), such Holder will receive such payment less all such applicable taxes. The Indenture contains provisions for the holding of meetings of Debentureholders and rendering certain resolutions passed at such meetings by the Holders of the majority in aggregate principal amount of the Debentures represented at the meeting and voted on such resolutions binding upon all Debentureholders, subject to the provisions of the Indenture. This Debenture may only be transferred upon compliance with the conditions precedent in the Indenture on the register kept at the principal office of the Trustee in the City of Toronto, Ontario and may be exchanged at such place, by the registered Holder hereof or its executors or administrators or other legal representatives or its or their attorney duly appointed by an instrument in writing in form and execution satisfactory to the Trustee, and upon compliance with such reasonable requirements as the Trustee may prescribe, and such transfer shall be duly noted thereon by the Trustee. Neither the Corporation nor the Trustee nor any registrar shall be required to transfer or exchange any Debentures on any Interest Payment Date or Redemption Date or for a period of 15 Business Days preceding any Interest Payment Date (as defined in the Indenture) or Redemption Date. This Debenture shall not become obligatory for any purpose until it shall have been certified by the Trustee for the time being under the Indenture. The Holder of this Debenture, by receiving and holding same, hereby accepts and agrees to be bound by the terms, and to be entitled to the benefits of this Debenture and of the Indenture and confirms the appointment of the Trustee and of the Indenture, the whole in accordance with and subject to the respective provisions thereof. IN WITNESS WHEREOF AMVESCAP INC. has caused this Debenture to be signed by its President and Secretary. 81 -5- DATED as of the 1st day of August, 2000. AMVESCAP INC. By: -------------------------------------- President By: -------------------------------------- Secretary TRUSTEE'S CERTIFICATE This Debenture is one of the AMVESCAP Equity Subordinated Debentures referred to in the Indenture within mentioned. CIBC MELLON TRUST COMPANY, Trustee By: -------------------------------------- Authorized Signing Officer 82 -6- - -------------------------------------------------------------------------------- CERTIFICATE OF ENTITLEMENT This Certificate is one of the duly authorized certificates of the Corporation designated as its Certificates of Entitlement (the "CERTIFICATES") issued in accordance with the Voting and Exchange Trust Agreement between AMVESCAP INC. (the "CORPORATION"), AMVESCAP PLC and the Trustee designated thereunder concurrently with the issuance of the AMVESCAP Equity Subordinated Debentures (the "DEBENTURES") of the Corporation. This Certificate and the attached Debenture(s) may be transferred and surrendered only together. The Voting and Exchange Trust Agreement provides that upon presentation of this Certificate together with the surrender of the attached Debenture(s), the holder of this Certificate shall be entitled to become, for all purposes, a "Beneficiary" under the terms of the Voting and Exchange Trust Agreement to the extent that the holder becomes the registered holder of any Exchangeable Shares in connection with the surrender of the attached Debenture(s). A copy of the Voting and Exchange Trust Agreement is on file at the registered office of the Corporation in Halifax, Nova Scotia. BY WITNESS WHEREOF, the Corporation has caused this instrument to be duly executed. AMVESCAP INC. By: By: -------------------------------- --------------------------------- PRESIDENT SECRETARY - -------------------------------------------------------------------------------- The Form of Assignment, Retraction Request and Conversion Notice (collectively, the "FORMS") are attached to this Debenture. The holder of this Debenture should contact the office of CIBC Mellon Trust Company in Toronto in order to obtain a copy of the Forms should they become detached from this Debenture. 83 -7- FORM OF ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto __________________________________________, whose address and social insurance number, if applicable, are set forth below, this Debenture (or $________ principal amount hereof*) of AMVESCAP Inc. standing in the name(s) of the undersigned in the register maintained by the Trustee on behalf of the Corporation with respect to such Debenture and does hereby irrevocably authorize and direct the Trustee to transfer such Debenture in such register, with full power of substitution in the premises. Dated: -------------------------------------------------------------------------- Address of Transferee: ---------------------------------------------------------- (Street Address, City, Province and Postal Code) -------------------------------- Social Insurance Number of Transferee, if applicable: --------------------------- *If less than the full principal amount of the within Debenture is to be transferred, indicate in the space provided the principal amount (which must be $1,000 or an integral multiple thereof) to be transferred. 1. The signature(s) to this assignment must correspond with the name(s) as written upon the face of this Debenture in every particular without alteration or any change whatsoever. The signature(s) must be guaranteed by a Canadian chartered bank or trust company or by a member firm of a recognized stock exchange in Canada. Notarized or witnessed signatures are not acceptable as guaranteed signatures. 2. The registered holder of this Debenture is responsible for the payment of any documentary, stamp or other transfer taxes that may be payable in respect of the transfer of this Debenture. Signature of Guarantor: - ----------------------------- ------------------------------------------- Authorized Officer Signature of transferring registered holder - ----------------------------- Name of Institution 84 -8- CONVERSION NOTICE TO: AMVESCAP INC. c/o CIBC Mellon Trust Company 199 Bay Street Commerce Court West Securities Level Toronto, Ontario, Canada M5L 1G9 NOTE: All capitalized terms used herein have the meanings ascribed thereto in the Indenture mentioned below, unless otherwise indicated. Subject to the right of the Corporation to pay the Conversion Value in cash, the undersigned registered holder of the attached Debentures irrevocably elects to convert such Debentures (or $_____________________ principal amount thereof*) in accordance with the terms of the Indenture referred to in such Debentures on _______________ [THE DEBENTUREHOLDER MUST SPECIFY THE DATE UPON WHICH IT WANTS THE CONVERSION TO BE EFFECTIVE WHICH CANNOT BE LESS THAN FOUR BUSINESS DAYS OR MORE THAN 15 BUSINESS DAYS FROM THE DAY THE TRUSTEE RECEIVES THIS CONVERSION NOTICE AND IF THIS CONVERSION NOTICE IS RECEIVED BY THE TRUSTEE AFTER 4:30 P.M. (TORONTO TIME) ON ANY DAY IT WILL BE DEEMED TO HAVE BEEN RECEIVED BY THE TRUSTEE ON THE NEXT BUSINESS DAY]. The undersigned registered holder of such Debentures tenders herewith such Debentures, and, if applicable, directs that the Exchangeable Shares of AMVESCAP Inc. issuable upon a conversion be issued and delivered to the person indicated below. (If Exchangeable Shares are to be issued in the name of a person other than the holder, all requisite transfer taxes must be tendered by the undersigned). Dated: ---------------------------- ------------------------------------ (Signature of Registered Holder) * If less than the full principal amount of the Debentures, indicate in the space provided the principal amount (which must be $1,000 or integral multiples thereof). Note: If Exchangeable Shares are to be issued in the name of a person other than the holder, the signature must be guaranteed by a chartered bank, a trust company or a member firm of a recognized stock exchange in Canada. (Print name in which Exchangeable Shares are to be issued, delivered and registered) Name ----------------------------------- - --------------------------------------- ------------------------------------ (Address) (City, Province and Postal Code) Name of guarantor: ------------------------------------------ Authorized signature: --------------------------------------- 85 -9- [RETRACTION REQUEST TO BE COMPLETED ONLY IF THE DEBENTUREHOLDER WISHES TO HAVE THE CORPORATION IMMEDIATELY REDEEM ALL OR ANY OF THE EXCHANGEABLE SHARES THE DEBENTUREHOLDER RECEIVES UPON CONVERSION OF THIS DEBENTURE. THIS RETRACTION REQUEST IS SUBJECT TO THE CORPORATION'S OVERRIDING RIGHT TO ELECT TO PAY THE CONVERSION VALUE IN CASH IN LIEU OF DELIVERING EXCHANGEABLE SHARES ON CONVERSION.] RETRACTION REQUEST To: AMVESCAP Inc. (the "Corporation") and AVZ Callco Inc. ("Callco") This notice is given pursuant to Section 6 of the provisions (the "SHARE PROVISIONS") attaching to the Exchangeable Shares issuable upon conversion of this Debenture and all capitalized words and expressions used in this notice that are not defined in the Indenture but are defined in the Share Provisions have the meanings ascribed to such words and expressions in such Share Provisions. The undersigned hereby notifies the Corporation that, provided (i) the Corporation has not exercised its right to pay the Conversion Value in cash, and (ii) the Retraction Call Right referred to below has not been exercised, the undersigned desires to have the Corporation redeem in accordance with Section 6 of the Share Provisions: [ ] all share(s) issuable upon conversion of this Debenture; or [ ] _______ share(s) only issuable upon conversion of this Debenture. The undersigned hereby notifies the Corporation that the Retraction Date shall be _____________________. NOTE: The Retraction Date must be a Business Day and must not be less than 10 Business Days nor more than 15 Business Days after the Conversion Date. If no such Business Day is specified above, the Retraction Date shall be deemed to be the 15th Business Day after the Conversion Date. The undersigned acknowledges the overriding Retraction Call Right of Callco to purchase all but not less than all the Retracted Shares from the undersigned and that this notice is and shall be deemed to be a revocable offer by the undersigned to sell the Retracted Shares to Callco in accordance with the Retraction Call Right on the Retraction Date for the Purchase Price and on the other terms and conditions set out in section 6(3) of the Share Provisions. This Retraction Request, and this offer to sell the Retracted Shares to Callco, may be revoked and withdrawn by the undersigned only by notice in writing given to the Corporation at any time before the close of business on the Business Day immediately preceding the Retraction Date. 86 -10- The undersigned acknowledges that if, as a result of solvency provisions of applicable law, the Corporation is unable to redeem all of the Retracted Shares, the Retracted Shares will be automatically exchanged pursuant to the Voting and Exchange Trust Agreement so as to require the Guarantor to purchase the unredeemed Retracted Shares. The undersigned hereby represents and warrants to Callco and the Corporation that the undersigned: [ ] is (select one) [ ] is not a non-resident of Canada for purposes of the Income Tax Act (Canada). THE UNDERSIGNED ACKNOWLEDGES THAT IN THE ABSENCE OF AN INDICATION THAT THE UNDERSIGNED IS NOT A NON-RESIDENT OF CANADA, WITHHOLDING ON ACCOUNT OF CANADIAN TAX MAY BE MADE FROM AMOUNTS PAYABLE TO THE UNDERSIGNED ON THE REDEMPTION OR PURCHASE OF THE RETRACTED SHARES. [ ] The undersigned hereby represents and warrants to Callco and the Corporation that the undersigned is not a person within the United States of America, its territories or possessions or any state thereof, or the District of Columbia (collectively, the "United States") or a U.S. person (within the meaning of Regulation S under the United States Securities Act of 1933, as amended) and is not making this Retraction Request for the account or benefit of a person within the United States or such a U.S. person. The undersigned hereby represents and warrants to Callco and the Corporation that the undersigned (i) has good title to, and owns, this Debenture, free and clear of all liens, claims and encumbrances, and (ii) will have good title to, and own, the share(s) issuable upon conversion of this Debenture to be acquired by Callco or the Corporation, as the case may be, free and clear of all liens, claims and encumbrances. - -------------- ------------------------------ -------------------------- (Date) (Signature of Shareholder) (Guarantee of Signature) [ ] Please check box if the certificates for AMVESCAP Ordinary Shares and any cheque(s) resulting from the retraction or purchase of the Retracted Shares are to be held for pick-up by the Debentureholder from the Trustee, failing which such certificates and cheque(s) will be mailed to the last address of the Debentureholder as it appears on the Debenture register. 87 -11- NOTE: This panel must be completed and this certificate, together with such additional documents and payments (including, without limitation, any applicable Stamp Taxes) as the Trustee may require, must be deposited with the Trustee. The securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares will be issued and registered in, and made payable to, respectively, the name of the Debentureholder as it appears on the Debenture register and the certificates for AMVESCAP Ordinary Shares and any cheque(s) resulting from such retraction or purchase will be delivered to such Debentureholder as indicated above, unless the form appearing immediately below is duly completed. Date: ------------------- Name of Person in Whose Name Securities or Cheque(s) Are to be Registered, Issued or Delivered (please print): Street Address or P.O. Box: Signature of Shareholder: City, Province and Postal Code: Signature Guaranteed by: NOTE: If this Retraction Request is for less than all of the shares issuable upon conversion of this Debenture, a certificate representing the remaining Exchangeable Share(s) issuable upon conversion of this Debenture will be issued and registered in the name of the Debentureholder as it appears on the Debenture register. 88 SCHEDULE "B" FORM OF REDEMPTION NOTICE AMVESCAP INC. AMVESCAP EQUITY SUBORDINATED DEBENTURES REDEMPTION NOTICE TO: Holders of AMVESCAP Equity Subordinated Debentures (the "DEBENTURES") of AMVESCAP Inc. (the "CORPORATION") NOTE: All capitalized terms used herein have the meanings ascribed thereto in the Indenture mentioned below, unless otherwise indicated. Notice is hereby given pursuant to Section 3.3 of the Indenture dated August 1, 2000 among the Corporation, CIBC Mellon Trust Company (the "TRUSTEE") and AMVESCAP PLC ("AMVESCAP"), that [, SUBJECT TO THE SATISFACTION OF THE CONDITION SET OUT IN THE FOLLOWING PARAGRAPH (THE "CONDITION")] the aggregate principal amount of all Debentures outstanding will be redeemed as of o (the "REDEMPTION DATE"), upon payment of a redemption amount of $o for each $1,000 principal amount of Debentures, being equal to the aggregate of (i) $1,200, plus (ii) all accrued and unpaid interest on such $1,000 principal amount to but excluding the Redemption Date (collectively, the "REDEMPTION AMOUNT"). [THERE IS AN OFFER (THAT IS A TAKE-OVER BID OR ISSUER BID TO PURCHASE AMVESCAP ORDINARY SHARES OR ANOTHER TRANSACTION WHICH HAS A SIMILAR EFFECT AND ONE OF THE CONDITIONS TO THE COMPLETION OF SUCH PURCHASE PURSUANT TO SUCH BID OR OTHER TRANSACTION IS THE REDEMPTION OF THE DEBENTURES) AND THIS NOTICE OF REDEMPTION AND THE CORPORATION'S OBLIGATION PURSUANT TO THIS NOTICE TO REDEEM ALL OF THE OUTSTANDING DEBENTURES IS SUBJECT TO COMPLETION OF SUCH OFFER.] [SUBJECT TO SATISFACTION OF THE CONDITION,] The Redemption Amount (less any tax required by law to be deducted) will be payable upon presentation and surrender of the Debentures called for redemption at the following corporate office: [SET OUT ADDRESS OF PRINCIPAL CORPORATE OFFICE IN TORONTO] The interest upon the principal amount of Debentures called for redemption shall cease to be payable from and after the Redemption Date, unless payment of the Redemption Amount shall not be made on presentation for surrender of such Debentures at the above-mentioned corporate office on or after the Redemption Date or prior to the setting aside of the Redemption Amount pursuant to the Indenture. [PURSUANT TO SECTION 3.6 OF THE INDENTURE, THE CORPORATION HEREBY IRREVOCABLY ELECTS TO SATISFY ITS OBLIGATION TO PAY TO HOLDERS OF DEBENTURES THE REDEMPTION AMOUNT BY ISSUING AND DELIVERING TO THE HOLDERS THAT NUMBER OF FREELY TRADEABLE EXCHANGEABLE 89 -2- SHARES OBTAINED BY DIVIDING (i) THE REDEMPTION AMOUNT, BY (ii) 95% OF THE CURRENT MARKET PRICE OF AN AMVESCAP ORDINARY SHARE ON THE DATE OF THIS REDEMPTION NOTICE (THE "SHARE REDEMPTION RIGHT"). THE CURRENT MARKET PRICE OF AMVESCAP ORDINARY SHARE IS $o.] [NO FRACTIONAL EXCHANGEABLE SHARES SHALL BE DELIVERED UPON THE EXERCISE BY THE CORPORATION OF THE ABOVE-MENTIONED SHARE REDEMPTION RIGHT BUT, IN LIEU THEREOF, THE CORPORATION SHALL PAY THE CASH EQUIVALENT THEREOF DETERMINED ON THE BASIS OF THE CURRENT MARKET PRICE OF AN AMVESCAP ORDINARY SHARE ON THE DATE OF THIS REDEMPTION NOTICE (LESS ANY TAX REQUIRED BY LAW TO BE DEDUCTED).] Neither the Corporation nor the Trustee nor any registrar shall be required to transfer or exchange any Debentures on any Interest Payment Date or Redemption Date or for a period of 15 Business Days preceding any Interest Payment Date or Redemption Date. Debentureholders are reminded that, subject to and in accordance with the provisions of the Indenture, their Debentures are convertible at any time and from time to time. A Debentureholder wishing to convert its Debentures should review the provisions of Article 4 of the Indenture and the terms and conditions of its Debentures and the Conversion Notice (including, without limitation, the Retraction Request forming part of such notice) printed on its Debenture certificate. DATED as of the o day of o. AMVESCAP INC. By: -------------------------------------- Authorized Signing Officer 90 SCHEDULE "C" FORM OF NOTICE OF CONVERSION CONVERSION NOTICE TO: AMVESCAP INC. c/o CIBC Mellon Trust Company 199 Bay Street Commerce Court West Securities Level Toronto, Ontario, Canada M5L 1G9 NOTE: All capitalized terms used herein have the meanings ascribed thereto in the Indenture mentioned below, unless otherwise indicated. Subject to the right of the Corporation to pay the Conversion Value in cash, the undersigned registered holder of the attached Debentures irrevocably elects to convert such Debentures (or $____________________ principal amount thereof*) in accordance with the terms of the Indenture referred to in such Debentures on _______________ [THE DEBENTUREHOLDER MUST SPECIFY THE DATE UPON WHICH IT WANTS THE CONVERSION TO BE EFFECTIVE WHICH CANNOT BE LESS THAN FOUR BUSINESS DAYS OR MORE THAN 15 BUSINESS DAYS FROM THE DAY THE TRUSTEE RECEIVES THIS CONVERSION NOTICE AND IF THIS CONVERSION NOTICE IS RECEIVED BY THE TRUSTEE AFTER 4:30 P.M. (TORONTO TIME) ON ANY DAY IT WILL BE DEEMED TO HAVE BEEN RECEIVED BY THE TRUSTEE ON THE NEXT BUSINESS DAY]. The undersigned registered holder of such Debentures tenders herewith such Debentures, and, if applicable, directs that the Exchangeable Shares of AMVESCAP Inc. issuable upon a conversion be issued and delivered to the person indicated below. (If Exchangeable Shares are to be issued in the name of a person other than the holder, all requisite transfer taxes must be tendered by the undersigned). Dated: ---------------------------- ------------------------------------ (Signature of Registered Holder) * If less than the full principal amount of the Debentures, indicate in the space provided the principal amount (which must be $1,000 or integral multiples thereof). Note: If Exchangeable Shares are to be issued in the name of a person other than the holder, the signature must be guaranteed by a chartered bank, a trust company or a member firm of a recognized stock exchange in Canada. (Print name in which Exchangeable Shares are to be issued, delivered and registered) Name ----------------------------------- 91 -2- - --------------------------------------- ------------------------------------ (Address) (City, Province and Postal Code) Name of guarantor: ----------------------------------------- Authorized signature: -------------------------------------- [RETRACTION REQUEST TO BE COMPLETED ONLY IF THE DEBENTUREHOLDER WISHES TO HAVE THE CORPORATION IMMEDIATELY REDEEM ALL OR ANY OF THE EXCHANGEABLE SHARES THE DEBENTUREHOLDER RECEIVES UPON CONVERSION OF THIS DEBENTURE. THIS RETRACTION REQUEST IS SUBJECT TO THE CORPORATION'S OVERRIDING RIGHT TO ELECT TO PAY THE CONVERSION VALUE IN CASH IN LIEU OF DELIVERING EXCHANGEABLE SHARES ON CONVERSION.] RETRACTION REQUEST To: AMVESCAP Inc. (the "Corporation") and AVZ Callco Inc. ("Callco") This notice is given pursuant to Section 6 of the provisions (the "SHARE PROVISIONS") attaching to the Exchangeable Shares issuable upon conversion of this Debenture and all capitalized words and expressions used in this notice that are not defined in the Indenture but are defined in the Share Provisions have the meanings ascribed to such words and expressions in such Share Provisions. The undersigned hereby notifies the Corporation that, provided (i) the Corporation has not exercised its right to pay the Conversion Value in cash, and (ii) the Retraction Call Right referred to below has not been exercised, the undersigned desires to have the Corporation redeem in accordance with Section 6 of the Share Provisions: [ ] all share(s) issuable upon conversion of this Debenture; or [ ] _______ share(s) only issuable upon conversion of this Debenture. The undersigned hereby notifies the Corporation that the Retraction Date shall be _____________________. NOTE: The Retraction Date must be a Business Day and must not be less than 10 Business Days nor more than 15 Business Days after the Conversion Date. If no such Business Day is specified above, the Retraction Date shall be deemed to be the 15th Business Day after the Conversion Date. The undersigned acknowledges the overriding Retraction Call Right of Callco to purchase all but not less than all the Retracted Shares from the undersigned and that this notice is and shall be deemed to be a revocable offer by the undersigned to sell the Retracted Shares to Callco in accordance with the Retraction Call Right on the Retraction Date for the Purchase Price and on the other terms and conditions set out in section 6(3) of the Share Provisions. This Retraction Request, and this offer to sell the 92 -3- Retracted Shares to Callco, may be revoked and withdrawn by the undersigned only by notice in writing given to the Corporation at any time before the close of business on the Business Day immediately preceding the Retraction Date. The undersigned acknowledges that if, as a result of solvency provisions of applicable law, the Corporation is unable to redeem all of the Retracted Shares, the Retracted Shares will be automatically exchanged pursuant to the Voting and Exchange Trust Agreement so as to require the Guarantor to purchase the unredeemed Retracted Shares. The undersigned hereby represents and warrants to Callco and the Corporation that the undersigned: [ ] is (select one) [ ] is not a non-resident of Canada for purposes of the Income Tax Act (Canada). THE UNDERSIGNED ACKNOWLEDGES THAT IN THE ABSENCE OF AN INDICATION THAT THE UNDERSIGNED IS NOT A NON-RESIDENT OF CANADA, WITHHOLDING ON ACCOUNT OF CANADIAN TAX MAY BE MADE FROM AMOUNTS PAYABLE TO THE UNDERSIGNED ON THE REDEMPTION OR PURCHASE OF THE RETRACTED SHARES. [ ] The undersigned hereby represents and warrants to Callco and the Corporation that the undersigned is not a person within the United States of America, its territories or possessions or any state thereof, or the District of Columbia (collectively, the "United States") or a U.S. person (within the meaning of Regulation S under the United States Securities Act of 1933, as amended) and is not making this Retraction Request for the account or benefit of a person within the United States or such a U.S. person. The undersigned hereby represents and warrants to Callco and the Corporation that the undersigned (i) has good title to, and owns, this Debenture, free and clear of all liens, claims and encumbrances, and (ii) will have good title to, and own, the share(s) issuable upon conversion of this Debenture to be acquired by Callco or the Corporation, as the case may be, free and clear of all liens, claims and encumbrances. - -------------- ------------------------------ -------------------------- (Date) (Signature of Shareholder) (Guarantee of Signature) [ ] Please check box if the certificates for AMVESCAP Ordinary Shares and any cheque(s) resulting from the retraction or purchase of the Retracted Shares are to be held for pick-up by the Debentureholder from the Trustee, failing which 93 -4- such certificates and cheque(s) will be mailed to the last address of the Debentureholder as it appears on the Debenture register. NOTE: This panel must be completed and this certificate, together with such additional documents and payments (including, without limitation, any applicable Stamp Taxes) as the Trustee may require, must be deposited with the Trustee. The securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares will be issued and registered in, and made payable to, respectively, the name of the Debentureholder as it appears on the Debenture register and the certificates for AMVESCAP Ordinary Shares and any cheque(s) resulting from such retraction or purchase will be delivered to such Debentureholder as indicated above, unless the form appearing immediately below is duly completed. Date: ------------------- Name of Person in Whose Name Securities or Cheque(s) Are to be Registered, Issued or Delivered (please print): Street Address or P.O. Box: Signature of Shareholder: City, Province and Postal Code: Signature Guaranteed by: NOTE: If this Retraction Request is for less than all of the shares issuable upon conversion of this Debenture, a certificate representing the remaining Exchangeable Share(s) issuable upon conversion of this Debenture will be issued and registered in the name of the Debentureholder as it appears on the Debenture register. 94 SCHEDULE "D-1" FORM OF MATURITY NOTICE AMVESCAP INC. AMVESCAP EQUITY SUBORDINATED DEBENTURES MATURITY NOTICE TO: Holders of AMVESCAP Equity Subordinated Debentures (the "DEBENTURES") of AMVESCAP Inc. (the "CORPORATION") NOTE: All capitalized terms used herein have the meanings ascribed thereto in the Indenture mentioned below, unless otherwise indicated. Notice is hereby given pursuant to Section 4.3 of the Indenture dated August 1, 2000 between the Corporation, CIBC Mellon Trust Company, as trustee (the "TRUSTEE") and AMVESCAP PLC ("AMVESCAP"), that the Debentures will become due and payable as of August 1, 2003 (the "MATURITY DATE") and that each $1,000 principal amount of Debentures will become convertible, at the option of the holder thereof, on the Maturity Date, into the Conversion Number of Exchangeable Shares then in effect. The Conversion Number of Exchangeable Shares on the Maturity Date will be calculated as (i) the Conversion Value (being the lesser of the AMVESCAP Share Value and $1,200) on such date divided by (ii) the Current Market Price of an AMVESCAP Ordinary Shares on the Maturity Date. The AMVESCAP Share Value on the Maturity Date will be equal to the product of the AMVESCAP Share Rate and the Current Market Price of an AMVESCAP Ordinary Share on the Maturity Date. The Current Market Price of an AMVESCAP Ordinary Share on the Maturity Date shall be the quotient obtained by dividing (i) the aggregate of the Daily Value of Trades for each day during the period of 20 consecutive Trading Days ending not more than three Trading Days before such date, by (ii) the aggregate volume of AMVESCAP Ordinary Shares used to calculate such Daily Value of Trades. Each holder of Debentures has the following options in respect of the maturity of the Debentures: (a) to convert their Debentures to Exchangeable Shares, only if the AMVESCAP Share Value on the Maturity Date is greater than or equal to $1,000, subject to the right of the Corporation to pay the Conversion Value in cash; (b) to convert their Debentures to Exchangeable Shares, whether or not the AMVESCAP Share Value on the Maturity Date exceeds $1,000, subject to the right of the Corporation to pay the Conversion Value in cash; or (c) to receive payment of the principal amount of the Debentures in cash, subject to the exercise by the Corporation of the Share Repayment Right; 95 -2- it being understood, in each case, that the accrued interest, if any, shall be paid in cash. In order to select one of the above-mentioned options a Holder will be required to deliver to the Trustee at the following address: [SET OUT ADDRESS OF THE APPROPRIATE ADDRESS] before the close of business on the Business Day that is three Business Days prior to the Maturity Date (the "DETERMINATION DATE"), an exercise notice in the form annexed hereto duly completed and executed by such Holder or its executors or administrators or other legal representatives or its or their attorney duly appointed by instrument in form and execution satisfactory to the Trustee, together with the Debentures to which such notice relates. A HOLDER WHO DOES NOT DELIVER A DULY COMPLETED EXERCISE NOTICE AT OR BEFORE THE CLOSE OF BUSINESS ON THE DETERMINATION DATE WILL BE DEEMED TO HAVE SELECTED OPTION (a) AND THE DEBENTURES HELD BY SUCH HOLDERS WILL AUTOMATICALLY BE CONVERTED INTO EXCHANGEABLE SHARES IF THE AMVESCAP SHARE VALUE AS OF THE MATURITY DATE IS GREATER THAN OR EQUAL TO $1,000 [SUBJECT TO THE ELECTION BELOW MADE BY THE CORPORATION TO PAY THE CONVERSION VALUE IN CASH]. A Holder's selection of an option on the Determination Date should take into account the Current Market Price of an AMVESCAP Ordinary Share on the Maturity Date which may be more or less than the market price of an AMVESCAP Ordinary Share on the Maturity Date. A HOLDER SELECTING OPTION (b) MAY BE ACTING CONTRARY TO HIS OR HER ECONOMIC INTERESTS SINCE, IF THE AMVESCAP SHARE VALUE AT MATURITY IS LESS THAN $1,000, A HOLDER OF DEBENTURES MAY RECEIVE A GREATER AMOUNT UNDER OPTION (c). If a Holder selects option (a) or (b) and the Conversion Value (or any portion thereof) is subject to withholding taxes on account of income tax, the Corporation shall sell, or cause to be sold, through investment banks, brokers or dealers selected by the Corporation, out of the Exchangeable Shares issued by the Corporation for this purpose, such number of Exchangeable Shares that is sufficient to cover the amount of taxes required to be withheld and shall remit same, or cause same to be remitted, to the proper tax authorities within the period of time prescribed for this purpose under applicable laws. Pursuant to Section 4.3(4) of the Indenture, the Corporation hereby advises the Holders of Debentures that it [WILL DELIVER EXCHANGEABLE SHARES ON THE CONVERSION OF THE DEBENTURES] [OR] [IRREVOCABLY ELECTS TO PAY TO HOLDERS OF DEBENTURES WHO HAVE ELECTED OR ARE DEEMED TO HAVE ELECTED TO CONVERT THEIR DEBENTURES INTO EXCHANGEABLE SHARES, AN AMOUNT IN CASH EQUAL TO THE CONVERSION VALUE PER $1,000 PRINCIPAL AMOUNT OF DEBENTURES, LESS ANY TAX REQUIRED BY LAW TO BE DEDUCTED,] and that it [WILL DELIVER TO HOLDERS OF DEBENTURES WHO HAVE SELECTED OPTION (c) THAT NUMBER OF FREELY TRADEABLE EXCHANGEABLE SHARES EQUAL TO THE NUMBER OBTAINED BY DIVIDING THE PRINCIPAL AMOUNT OF SUCH DEBENTURES BY 95% OF THE CURRENT MARKET PRICE OF AN AMVESCAP ORDINARY SHARE ON THE MATURITY DATE. IN THE EVENT THAT THE CORPORATION ELECTS TO ISSUE AND DELIVER EXCHANGEABLE SHARES AS AFORESAID, UPON PRESENTATION AND SURRENDER OF THE DEBENTURES, THE CORPORATION SHALL PAY OR CAUSE TO BE PAID IN CASH TO THE HOLDER ALL ACCRUED AND 96 -3- UNPAID INTEREST TO THE MATURITY DATE, TOGETHER WITH THE CASH EQUIVALENT REPRESENTING FRACTIONAL EXCHANGEABLE SHARES.] DATED as of the o day of o, 2003. AMVESCAP INC. By: -------------------------------------- Authorized Signing Officer 97 SCHEDULE "D-2" FORM OF EXERCISE NOTICE AT MATURITY EXERCISE NOTICE TO: AMVESCAP INC. NOTE: All capitalized terms used herein have the meanings ascribed thereto in the Indenture mentioned below, unless otherwise indicated. The undersigned registered holder of AMVESCAP Equity Subordinated Debentures bearing Certificate No. o irrevocably elects (please check applicable box to indicate your choice): [ ] (a) to convert such Debentures to Exchangeable Shares (or $o principal amount thereof*) only if the AMVESCAP Share Value on the Maturity Date is greater than or equal to $1,000, subject to the right of the Corporation to pay the Conversion Value in cash; or [ ] (b) to convert such Debentures to Exchangeable Shares (or $o principal amount thereof*) whether or not the AMVESCAP Share Value on the Maturity Date exceeds $1,000, subject to the right of the Corporation to pay the Conversion Value in cash; or [ ] (c) to receive payment of the principal amount of such Debentures (or $o principal amount thereof*) in cash, subject to exercise by the Corporation of the Share Repayment Right; it being understood, in each case, that the accrued interest, if any, shall be paid in cash, in accordance with the terms of the Indenture referred to in such Debenture and tenders herewith such Debentures, and, if applicable, directs that the Exchangeable Shares of the Corporation issuable and deliverable upon a conversion or in satisfaction of the payment of the principal amount at the Maturity Date be issued and delivered to the person indicated below. (If Exchangeable Shares are to be issued in the name of a person other than the holder, all requisite transfer taxes must be tendered by the undersigned.) A HOLDER WHO DOES NOT DELIVER A DULY COMPLETED EXERCISE NOTICE AT OR BEFORE THE CLOSE OF BUSINESS ON THE DETERMINATION DATE WILL BE DEEMED TO HAVE SELECTED OPTION (a) AND THE DEBENTURES HELD BY SUCH HOLDERS WILL AUTOMATICALLY BE CONVERTED INTO EXCHANGEABLE SHARES IF THE AMVESCAP SHARE VALUE AS OF THE MATURITY DATE IS GREATER THAN OR EQUAL TO $1,000 [SUBJECT TO THE ELECTION IN THE MATURITY NOTICE MADE BY THE CORPORATION TO PAY THE CONVERSION VALUE IN CASH]. 98 -2- A HOLDER SELECTING OPTION (b) MAY BE ACTING CONTRARY TO HIS OR HER ECONOMIC INTERESTS SINCE, IF THE AMVESCAP SHARE VALUE AT MATURITY IS LESS THAN $1,000, A HOLDER OF DEBENTURES MAY RECEIVE A GREATER AMOUNT UNDER OPTION (c). Dated: --------------------------------- ------------------------------------ (Signature of Registered Holder) * If less than the full principal amount of the Debenture, indicate in the space provided the principal amount (which must be $1,000 or integral multiples thereof). Note: If Exchangeable Shares are to be issued in the name of a person other than the holder, the signature must be guaranteed by a chartered bank, a trust company or a member firm of a recognized stock exchange in Canada. (Print name in which Exchangeable Shares are to be issued, delivered and registered) Name ----------------------------------- - --------------------------------------- ------------------------------------ (Address) (City, Province and Postal Code) Name of guarantor: ----------------------------------------- Authorized signature: -------------------------------------- EX-4.28 16 h86436ex4-28.txt MERGER AGREEMENT - AVZ, INC. 1 EXHIBIT 4.28 MERGER AGREEMENT AMONG NATIONAL ASSET MANAGEMENT CORPORATION, THE SELLERS, THE OPTION HOLDER, AND AMVESCAP PLC AND AVZ, INC. DATED AS OF FEBRUARY 28, 2001 2 TABLE OF CONTENTS ARTICLE I DEFINITIONS Section 1.1 Definitions..................................................2 ARTICLE II THE MERGER Section 2.1 The Merger...................................................2 Section 2.2 Effective Date and Effective Time............................2 Section 2.3 Merger Consideration.........................................3 Section 2.4 Rights as Shareholders; Stock Transfers......................4 Section 2.5 Exchange Procedures..........................................4 Section 2.6 Client Look-Backs............................................5 Section 2.7 Additional Consideration.....................................6 Section 2.8 Closing......................................................9 Section 2.9 Estimated Closing Balance Sheet.............................10 Section 2.10 Deliveries at the Closing...................................11 Section 2.11 Legending of Securities.....................................12 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE COMPANY Section 3.1 Organization and Related Matters............................13 Section 3.2 Capital Structure...........................................13 Section 3.3 Title.......................................................14 Section 3.4 Authority; No Violation.....................................14 Section 3.5 Consents and Approvals......................................15 Section 3.6 Government Regulation.......................................16 Section 3.7 Properties..................................................21 Section 3.8 Financial Statements........................................22 Section 3.9 Absence of Changes..........................................23 Section 3.10 Contracts...................................................25 Section 3.11 No Other Brokers............................................27 Section 3.12 Legal Proceedings...........................................27 Section 3.13 Compliance with Applicable Law..............................27 Section 3.14 Insurance...................................................28
-i- 3 Section 3.15 Employee Benefit Plans; ERISA...............................28 Section 3.16 Technology and Intellectual Property........................30 Section 3.17 Taxes.......................................................32 Section 3.18 Assets Under Management.....................................35 Section 3.19 Affiliate Transactions......................................35 Section 3.20 Labor Matters, etc..........................................35 Section 3.21 Derivative Products.........................................35 Section 3.22 Books and Records...........................................36 Section 3.23 Environmental Matters.......................................36 Section 3.24 Disclosure..................................................37 Section 3.25 Investment..................................................37 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER PARENT Section 4.1 Organization and Related Matters............................38 Section 4.2 Authority; No Violation.....................................39 Section 4.3 Consents and Approvals......................................39 Section 4.4 Buyer Financing.............................................40 Section 4.5 No Other Broker.............................................40 Section 4.6 Legal Proceedings...........................................40 Section 4.7 Capitalization..............................................40 Section 4.8 Buyer Parent Reports........................................41 Section 4.9 Taxes.......................................................41 ARTICLE V COVENANTS Section 5.1 Conduct of Business by the Company..........................41 Section 5.2 No Solicitation, etc........................................43 Section 5.3 Consents....................................................43 Section 5.4 Investment Company Matters..................................46 Section 5.5 Insurance...................................................47 Section 5.6 Further Assurances..........................................47 Section 5.7 Efforts of Parties to Close.................................47 Section 5.8 Confidentiality and Announcements...........................48 Section 5.9 Access, Certain Communications..............................48 Section 5.10 Regulatory Matters; Third Party Consents....................49 Section 5.11 Expenses....................................................50
-ii- 4 Section 5.12 Non-Foreign Person Affidavit................................50 Section 5.13 Releases....................................................50 Section 5.14 Retention Bonus Plan........................................51 Section 5.15 Option Holders..............................................51 Section 5.16 Termination of Employee Benefit Plans.......................51 Section 5.17 Shareholder Approval of Certain Matters.....................52 Section 5.18 Seller Representative Approval..............................52 Section 5.19 Payment of Preferred Dividend Amount........................52 ARTICLE VI CONDITIONS TO CLOSING Section 6.1 Conditions to Buyer's and Buyer Parent's Obligations........53 Section 6.2 Conditions to the Company and the Sellers' Obligations......54 Section 6.3 Mutual Conditions...........................................55 ARTICLE VII INDEMNIFICATION Section 7.1 Survival of Representations, Warranties and Covenants.......55 Section 7.2 Obligations of the Common Sellers...........................56 Section 7.3 Obligations of the Preferred Seller.........................57 Section 7.4 Obligations of Buyer and Buyer Parent.......................58 Section 7.5 Procedure...................................................59 Section 7.6 Survival of Indemnity.......................................61 Section 7.7 Minimum Losses..............................................61 Section 7.8 Maximum Indemnification.....................................61 Section 7.9 Subrogation.................................................62 Section 7.10 Adjustments to Indemnification Obligations..................62 Section 7.11 Exclusive Remedy............................................62 Section 7.12 Right of Off-Set/Set-Off....................................62 Section 7.13 Adjustment..................................................63 Section 7.14 Seller Representative.......................................63 ARTICLE VIII TAX MATTERS Section 8.1 Tax Matters.................................................64
-iii- 5 ARTICLE IX TERMINATION Section 9.1 Termination.................................................66 Section 9.2 Survival After Termination..................................67 ARTICLE X MISCELLANEOUS Section 10.1 Amendments; Extension; Waiver...............................68 Section 10.2 Entire Agreement............................................68 Section 10.3 Interpretation..............................................68 Section 10.4 Severability................................................68 Section 10.5 Notices.....................................................69 Section 10.6 Binding Effect; Persons Benefiting; Assignment..............70 Section 10.7 Counterparts................................................70 Section 10.8 Governing Law...............................................70 Section 10.9 Specific Performance........................................71 Section 10.10 Waiver of Jury Trial and Punitive Damages...................71 Section 10.11 Seller Representative.......................................71 Annex A: Definitions................................................A-1 Annex B: Retention Plan.............................................B-1 Annex C: Employment Agreement.......................................C-1
-iv- 6 MERGER AGREEMENT MERGER AGREEMENT, dated as of February 28, 2001, by and among AMVESCAP PLC, a company incorporated under the laws of England ("Buyer Parent"), AVZ, Inc., a Delaware corporation and a direct wholly owned subsidiary of Buyer Parent ("Buyer", and together with Buyer Parent, the "Buyers"), National Asset Management Corporation, the Persons set forth under the heading "Common Sellers" on the signature pages (each a "Common Seller"), the Person set forth under the heading "Preferred Seller" on the signature pages (the "Preferred Seller", and together with the Common Sellers, the "Sellers") and the Person set forth under the heading "Option Holder" on the signature pages. RECITALS WHEREAS, the Common Sellers and the Preferred Seller are the owners of all of the shares of Common Stock and Preferred Stock, respectively, of the Company; WHEREAS, Buyer Parent and its wholly owned subsidiary, Buyer, desire to acquire the Company by means of a merger of the Company with and into Buyer on the terms and conditions set forth herein, with Buyer being the surviving corporation of such merger; WHEREAS, in order to induce Buyer Parent and Buyer to consummate such merger, the Sellers have agreed to make certain representations and warranties to the Buyers with respect to the business, affairs and condition of the Company, and the Sellers desire to make certain other agreements in connection with and to facilitate such merger, including the agreement of each Seller to approve such merger; and WHEREAS, certain employees of the Company have entered into Employment Agreements with the Buyer concurrently with the execution of this Agreement. NOW THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be bound hereby, the parties hereby agree as follows: 7 ARTICLE I DEFINITIONS Section 1.1 Definitions. For all purposes of this Agreement, capitalized terms used herein without definitions shall have their respective meanings as set forth in Annex A hereto. ARTICLE II THE MERGER Section 2.1 The Merger. (a) At the Effective Time, the Company shall merge with and into Buyer (the "Merger"), the separate corporate existence of the Company shall cease and Buyer shall survive and continue to exist as a Delaware corporation (the "Surviving Corporation"). (b) Subject to the satisfaction or waiver of the conditions set forth in Article VI, the Merger shall become effective upon the occurrence of the filing in the office of the Secretary of State of the State of Delaware of a certificate of merger in accordance with Section 251 of the DGCL and the filing in the office of the Secretary of State of the State of Kentucky of articles of merger in accordance with Section 271B.11-050 of the KBCA, or such later date and time as may be set forth in such certificate or articles. The Merger shall have the effects prescribed in the DGCL and the KBCA. (c) Articles of Incorporation and By-Laws. The certificate of incorporation and by-laws of the Surviving Corporation immediately after the Merger shall be those of Buyer as in effect immediately prior to the Effective Time. (d) Directors and Officers of Surviving Corporation. The directors and officers of the Surviving Corporation immediately after the Merger shall be the directors and officers of Buyer immediately prior to the Effective Time, until such time as their successors shall be duly elected and qualified. Section 2.2 Effective Date and Effective Time. Subject to the satisfaction or waiver of the conditions set forth in Article VI, the parties shall cause the effective date of the Merger (the "Effective Date") to occur (i) as soon as practical following the Closing but in no event later than the close of business on the Closing Date, or (ii) such other date to which the parties may agree in writing. The time on the 2 8 Effective Date when the Merger shall become effective is referred to as the "Effective Time." Section 2.3 Merger Consideration. Subject to the provisions of this Agreement, at the Effective Time, automatically by virtue of the Merger and without any action on the part of any Person: (a) subject to subsection (c) below, the one share of Preferred Stock issued and outstanding immediately prior to the Effective Time shall become and be converted into solely the right to receive (i) cash in the amount of (A) 50% of the Cash Merger Consideration less (B) $1,000,000 (such result, the "Preferred Stock Cash Consideration"), (ii) 50% of the Equity Merger Consideration (the "Preferred Stock Equity Consideration"), and (iii) the Aggregate Preferred Contingent Consideration, if any, as provided in Section 2.7 below; and (b) subject to subsection (c) below, each share of Common Stock issued and outstanding immediately prior to the Effective Time shall become and be converted into solely the right to receive (i) cash in an amount equal to (A) the Cash Merger Consideration minus (B) the Preferred Stock Cash Consideration (such result, the "Adjusted Common Stock Cash Consideration"), with the result of such subtraction being divided by (C) the number of shares of Common Stock issued and outstanding immediately prior to the Effective Time (the result of the foregoing computation being the "Per Share Cash Consideration") and (ii) that number of Parent Shares equal to (X) the Equity Merger Consideration minus (Y) the Preferred Stock Equity Consideration, with the result of such subtraction being divided by (Z) the number of shares of Common Stock outstanding immediately prior to the Effective Time (the result of the foregoing computation being the "Per Share Equity Consideration"), and (iii) the quotient of the Aggregate Common Contingent Consideration, if any, payable with respect to a share of Common Stock as provided in Section 2.7 below, divided by the number of shares of Common Stock issued and outstanding immediately prior to the Effective Time. (c) Notwithstanding any other provision of this Agreement, the amount of Preferred Stock Cash Consideration and Adjusted Common Stock Cash Consideration shall be increased and/or decreased, as the case may be, to give effect to the proposition that the Preferred Seller will receive an amount of Preferred Stock Cash Consideration under subsection (a) that such Preferred Seller would have received if there was no increase or decrease, as the case may be, to the Adjusted Merger Consideration as a result of a Net Capital Excess or Net Capital Shortfall, respectively. 3 9 (d) Outstanding Buyer Stock. Each share of the capital stock of Buyer issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and unaffected by the Merger. Section 2.4 Rights as Shareholders; Stock Transfers. At the Effective Time, holders of the Preferred Stock and the Common Stock shall cease to be, and shall have no rights as, shareholders of the Company, except to receive the consideration payable in respect of such stock as provided in this Article II. Upon and after the Effective Time, the Company's stock transfer books will be closed and no transfers of shares of Preferred Stock or Common Stock will be made. Section 2.5 Exchange Procedures. (a) At the Effective Time, the Surviving Corporation or Buyer Parent shall: (i) pay the Preferred Stock Cash Consideration by Wire Transfer to the holder of the Preferred Stock, against delivery to the Surviving Corporation by or on behalf of such holder of the certificate, endorsed by such holder for surrender and cancellation, representing the share of Preferred Stock issued and outstanding immediately prior to the Effective Time and owned by such holder; (ii) pay by Wire Transfer to each holder of Common Stock, against delivery to the Surviving Corporation by or on behalf of such holder of the certificate or certificates, endorsed by such holder for surrender and cancellation, representing the shares of Common Stock issued and outstanding immediately prior to the Effective Time and respectively owned by such holder, the Per Share Cash Consideration payable in respect of such shares; and (iii) issue and deliver to (A) the holder of the Preferred Stock, against delivery of the certificate representing the shares of Preferred Stock issued and outstanding immediately prior to the Effective Time and owned by such holder immediately prior to the Effective Time, a certificate representing the whole number of shares of Parent Stock constituting the Preferred Stock Equity Consideration, and (B) each holder of Common Stock, against delivery of certificates representing shares of Common Stock issued and outstanding immediately prior to the Effective Time and respectively owned by such holder, a certificate representing Per Share Equity Consideration issuable in respect of the shares of Common Stock so delivered, in each case disregarding any fractional shares resulting from the computation of the 4 10 number of shares of Parent Stock issuable to such holder in respect of shares of Preferred Stock or Common Stock respectively owned by such holder immediately prior to the Closing. (b) The Surviving Corporation shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Preferred Stock or Common Stock, such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any applicable provision of state, local or foreign tax law; provided, however, that if a Seller provides the affidavit referred to in Section 5.12, no deduction may be made under Section 1445 of the Code in respect of any amounts payable to such Seller. To the extent that amounts are withheld by the Surviving Corporation, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Preferred Stock or Common Stock, as the case may be, in respect of which such deduction and withholding was made by the Surviving Corporation. Section 2.6 Client Look-Backs. Solely for purposes of calculating the Closing Revenue Run-Rate and the amount of the Adjusted Merger Consideration: (a) To the extent that Buyer Parent and the Seller Representative are unable to agree that there exists for any Client a notification or communication, whether written or oral, that would reasonably be construed as equivalent to a statement that such Client will terminate or intends to terminate its Investment Management Agreement with the Company within sixty (60) days following the Closing Date under Section 5.3, such Clients will not be deemed to have given their Consent at the Closing Date, but if, and to the extent, that any such Client has not terminated, or advised the company, either orally or in writing, of its intention to terminate, its Investment Management Agreement during the sixty (60) day period following the Closing Date, such Consent shall then be deemed to have been given as of the last day of the calendar month ending prior to the Closing Date and Buyer Parent shall make a payment to the Sellers promptly following the end of such sixty (60) day period pro rata to each Seller (based on each Sellers' share of the aggregate Merger Consideration paid to the Sellers under Article II) in an aggregate amount equal to the amount that would have been paid to the Sellers in respect of all such Clients had such Clients given such Consent on or prior to the last day of the calendar month ending prior to the Closing Date. (b) To the extent that any Person enters into an Investment Management Agreement with the Company on or prior to the Closing Date but does not deposit any funds with the Company in respect of such Investment Management Agreement on or prior to the Closing Date, if, and to the extent, that such Person thereafter deposits any funds in respect of such Investment Management Agreement during the 5 11 sixty (60) day period following the Closing Date, such funds shall be deemed to be included in Adjusted Closing Assets Under Management as if such funds had been contributed as of the last day of the calendar month ending prior to the Closing Date and Buyer Parent shall make a payment to the Sellers promptly following the end of such sixty (60) day period pro rata to each Seller (based on each Sellers' share of the aggregate Merger Consideration paid to the Sellers under Article II) in an amount that would have been paid to the Sellers had such funds been deposited on or prior to the last day of the calendar month ending prior to the Closing Date. (c) Shares of Parent Stock that are issuable pursuant to subparagraphs (a) and (b) of this Section 2.6 shall be determined in the same manner as the number of shares of Parent Stock comprising the Preferred Stock Equity Consideration and the Per Share Equity Consideration is determined, and all fractional shares resulting from such determination as to any Seller shall be disregarded. Section 2.7 Additional Consideration. (a) As additional merger consideration, the Surviving Corporation agrees to pay to the Preferred Seller and each Common Seller the Contingent Consideration, if any, as follows: (i) For the first Yearly Period, an amount equal to (A) if the Yearly Period CAGR is equal to or less than 15%, 0, or (B) if the Yearly Period CAGR is equal to or greater than 40%, 100% of the Annual Contingent Cash Consideration and 100% of the Annual Contingent Equity Consideration, or (C) if the Yearly Period CAGR is greater than 15% but less than 40%, an amount equal to the sum of (i) the product of (A) 100% of the Annual Contingent Cash Consideration and (B) the Contingent Percentage and (ii) the product of (A) 100% of the Annual Contingent Equity Consideration and (B) the Contingent Percentage. (ii) For the second Yearly Period, an amount equal to (A) if the Yearly Period CAGR is equal to or less than 15%, 0, or (B) if the Yearly Period CAGR is equal to or greater than 40%, 200% of the Annual Contingent Cash Consideration and 200% of the Annual Contingent Equity Consideration less the amount, if any, of Contingent Cash Consideration and Contingent Equity Consideration, respectively, paid pursuant to Section 2.7(a)(i), or (C) if the Yearly Period CAGR is greater than 15% but less than 40%, an amount equal to the sum of (i) the product of (A) 200% of the Annual Contingent Cash Consideration and (B) the Contingent Percentage for such Yearly Period and (ii) the product of (A) 200% of the Annual Contingent Equity Consideration and (B) the Contingent Percentage for such 6 12 Yearly Period less (iii) the amount, if any, of Contingent Cash Consideration and Contingent Equity Consideration, respectively, paid pursuant to Section 2.7(a)(i); provided that in no case shall such payment be less than 0. (iii) For the third Yearly Period, an amount equal to (A) if the Yearly Period CAGR is equal to or less than 15%, 0, or (B) if the Yearly Period CAGR is equal to or greater than 40%, 300% of the Annual Contingent Cash Consideration and 300% of the Annual Contingent Equity Consideration less the amount, if any, of Contingent Cash Consideration and Contingent Equity Consideration, respectively, paid pursuant to Section 2.7(a)(i) and (ii), or (C) if the Yearly Period CAGR is greater than 15% but less than 40%, an amount equal to the sum of (i) the product of (A) 300% of the Annual Contingent Cash Consideration and (B) the Contingent Percentage for such Yearly Period and (ii) the product of (A) 300% of the Annual Contingent Equity Consideration and (B) the Contingent Percentage for such Yearly Period less (iii) the amount, if any, of Contingent Cash Consideration and Contingent Equity Consideration, respectively, paid pursuant to Section 2.7(a)(i) and (ii); provided that in no case shall such payment be less than 0. (b) At the later of (x) sixty (60) days following the end of the Yearly Period with respect to which any Annual Contingent Payment is payable or (y) five (5) Business Days following the determination of the amount of Annual Contingent Consideration for a Yearly Period pursuant to subsection (c)(iii) below, the Surviving Corporation or Buyer Parent shall pay such Annual Contingent Consideration to the Preferred Seller and each Common Seller as follows: (i) With respect to the Preferred Seller, (A) Wire Transfer to the Preferred Seller an amount in cash equal to the product of (1) the Annual Cash Contingent Payment in respect of such Yearly Period and (2) the Preferred Participation Percentage (the "Annual Preferred Contingent Cash Consideration") and (B) issue and deliver to the Preferred Seller certificates representing a number of shares of Parent Stock equal to the product of (1) the Annual Equity Contingent Payment in respect of such Yearly Period and (2) the Preferred Participation Percentage, rounded down to the nearest whole number (the "Annual Preferred Contingent Equity Consideration") (the sum of each such amounts, if any, for all Yearly Periods, the "Aggregate Preferred Contingent Consideration"); and (ii) With respect to each Common Seller, (A) Wire Transfer to each Common Seller an amount in cash equal to the product of (1) Common Seller Participation Percentage and (2) (x) the Annual Cash Contingent 7 13 Payment in respect of such Yearly Period less (y) the Annual Preferred Contingent Cash Consideration and (B) issue and deliver to each Common Seller certificates representing a number of shares of Parent Stock equal to the product of (1) Common Seller Participation Percentage and (2) (x) the Annual Equity Contingent Payment in respect of such Yearly Period less (y) the Annual Preferred Contingent Equity Consideration in respect of such Yearly Period, rounded down to the nearest whole number (the sum of each such amounts, if any, for all Yearly Periods, the "Aggregate Common Contingent Consideration"). (c) As promptly as practicable, but in no event later than forty-five (45) days after the end of each Yearly Period, the Surviving Corporation shall cause to be prepared and delivered to the Seller Representative and the Preferred Seller a statement setting forth the amount, if any, of the Annual Contingent Payment in respect of such Yearly Period payable pursuant to this Section 2.7 (the "Contingent Payment Statement"). (i) The Seller Representative and the Preferred Seller and their representatives shall have the right to review the workpapers, schedules and other documents and information prepared or reviewed by the Surviving Corporation in connection with each Annual Contingent Payment. The Surviving Corporation shall provide the Seller Representative and the Preferred Seller and their representatives reasonable access to the officers, employees, contracts, books and records of the Surviving Corporation as the Seller Representative and/or the Preferred Seller or their representatives may reasonably request in order to verify the amount of any Annual Contingent Payment. (ii) Within fifteen (15) days after the delivery of the Contingent Payment Statement, the Seller Representative shall notify the Surviving Corporation in writing of any objection thereto, specifying in reasonable detail any such objection. If the Seller Representative does not object in writing to the Contingent Payment Statement within fifteen (15) days from receipt thereof or the Surviving Corporation and the Seller Representative agree on the resolution of all objections prior to the lapse of sixty (60) days following the end of the Yearly Period to which such Contingent Payment Statement relates, the Contingent Payment Statement (including any changes as mutually agreed) shall be final and binding on all parties. The Seller Representative and the Surviving Corporation agree to negotiate in good faith to attempt to resolve any objection made under this subsection; provided that if either party, in its sole discretion, terminates such negotiations, then not later than ten (10) days after such termination the dispute shall be submitted 8 14 for resolution by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Such arbitration shall be by a panel of three arbitrators, each of which shall be experienced in the matters at issue. One such arbitrator shall be selected by each of the Buyer Parent and the Seller Representative, and the two arbitrators so selected shall select the third arbitrator. The arbitration shall be held at such place in Louisville, Kentucky as may be specified by the arbitrators. The decision of the arbitrators shall be final and binding as to all matters submitted to arbitration pursuant to this Agreement. Each of Buyer Parent and the Seller Representative shall bear its own costs and expenses incurred in connection with any such arbitration proceeding (including reasonable attorney's fees), and the fees and expenses of the arbitrators shall be paid by the party against which the decision is rendered, or if no decision is rendered, such fees and expenses shall be borne equally between the Buyer Parent and the Seller Representative. If the arbitrators' decision is a compromise, the determination of which party or parties bears the fees and expenses of the arbitrators shall be made by the arbitrators on the basis of the arbitrators' assessment of the relative merits of the parties' positions. (d) The Surviving Corporation shall pay interest to the Sellers pro rata (based on each Seller's share of the aggregate Merger Consideration paid under Article II) in respect of the amount of any Annual Contingent Consideration due in respect of a Yearly Period from the date that is sixty (60) days after the end of such Yearly Period up to and including the date such payment is actually made under this Section 2.7 at an annual rate of LIBOR plus two percent (2%). (e) The Buyers and Sellers agree to treat as interest the cash portion of any Contingent Consideration to be received by the Sellers to the extent that any portion of such Contingent Consideration is treated as interest under Section 483 of the Code. Section 2.8 Closing. Subject to the terms and conditions of this Agreement, the closing of the Merger (the "Closing") shall be at 10:00 A.M. at the offices of Alston & Bird LLP, 90 Park Avenue, New York, New York 10016, or at such other location as may be mutually agreed to by Buyer Parent and the Seller Representative three (3) Business Days after the later of (a) April 30, 2001 or (b) the date on which all of the conditions in Article VI have been satisfied or waived, or on such other date as may be mutually agreed to by Buyer Parent and the Seller Representative (the "Closing Date"). 9 15 Section 2.9 Estimated Closing Balance Sheet. (a) Not later than five (5) Business Days prior to the Closing Date, the Common Sellers shall cause the Company to deliver to the Buyers a pro forma estimated balance sheet of the Company as of the Closing Date, reflecting the good faith best estimate of the Common Sellers as to the value of the tangible assets and the amount of the liabilities of the Company as of the Closing Date and prepared in accordance with GAAP applied consistently with the preparation of the unaudited balance sheets of the Company included in the Financial Statements (and after giving effect to the payment of the Preferred Divided Amount); provided, however, that, whether or not in accordance with GAAP or consistent with past practices, such pro forma estimated balance sheet shall include (i) an accrual for all bonuses payable, whether before or after the Closing Date, with respect to or for services provided by employees of the Company prior to the Closing Date, (ii) adequate accruals for all Tax liabilities of the Company other than for deferred Tax liabilities that reflect timing differences between book and Tax income (including, without limitation, deferred Tax liabilities and deferred payments due after the Closing Date pursuant to the settlement of Tax liabilities for periods occurring prior to the Closing Date) relating to any tax periods ended on or prior to the Closing Date, (iii) adequate accruals, if any, for all obligations of the Company to pay any deferred compensation with respect to or for services provided by employees of the Company prior to the Closing Date and (iv) an accrual for all expenses (without related tax benefits) incurred by the Company in connection with the transactions contemplated by this Agreement (including, without limitation, the investment banking and legal fees described in Section 3.11(a)). Such pro forma estimated balance sheet is herein referred to as the "Estimated Closing Balance Sheet". The Estimated Closing Balance Sheet, when so delivered, shall be accompanied by a Schedule (the "Closing Schedule") prepared by the chief financial officer of the Company, showing the Net Capital as of the Closing Date as reflected on the Estimated Closing Balance Sheet. (b) As soon as practicable after the Closing Date, but in no case later than sixty (60) days thereafter, Buyer Parent shall deliver to the Seller Representative a statement setting forth the final calculation of Net Capital (the "Final Statement") and Buyer Parent or the Common Sellers, as the case may be, shall pay such other party the amount by which the amount of Net Capital set forth therein is greater than or less than the amount of such Net Capital set forth in the Estimated Closing Balance Sheet no later than the earlier of (i) fifteen (15) days after the receipt of such Final Statement or (ii) if the Seller Representative has any objection to such Final Statement, five (5) Business Days following the determination by the arbitrators as described below of the amount of the payment due under this Section 2.9(b). Within (15) days after the delivery of the Final Statement, the Seller Representative shall notify Buyer Parent in writing of any objection thereto, specifying in reasonable 10 16 detail any such objection. If the Seller Representative does not object in writing to the statement within fifteen (15) days from receipt thereof, the statement shall be final and binding on the Buyers and Common Sellers, and Buyer Parent or the Common Sellers (pro rata in proportion to the aggregate amount of Merger Consideration received by each such Common Seller under Article II), as the case may be, shall pay such other party the amount by which the amount of Net Capital set forth in the Final Statement is greater than or less than the amount of such Net Capital set forth in the Estimated Closing Balance Sheet. The Seller Representative and Buyer Parent agree to negotiate in good faith to attempt to resolve any objection made under this subsection; provided that if any party, in its sole discretion, terminates such negotiations, then not later than ten (10) days after such termination, the dispute shall be submitted to a nationally recognized accounting firm agreed to between the Buyers and Common Sellers for resolution. The Seller Representative and Surviving Corporation shall use reasonable efforts to cause such accounting firm to render its report within ninety (90) days of appointment and such determination as to the amount of Net Capital shall be final and binding on all of the Buyers and Common Sellers. If such determination is not made prior to the lapse of ninety (90) days following the Closing Date, the date specified in this subsection (b) on which any payment in respect of the amount of the excess or deficit Net Capital, as the case may be, is to be paid shall be extended to that date that is five (5) Business Days after the date on which such determination is made. The fees and expenses of the accounting firm incurred under this Section 2.9(b) shall be shared equally among the Seller Representative and the Surviving Corporation. Section 2.10 Deliveries at the Closing. (a) Not less than three (3) Business Days prior to the Closing Date, the Seller Representative and the Preferred Seller shall deliver Wire Transfer instructions to the Buyer for the Common Sellers and the Preferred Seller, respectively. (b) At the Closing, each Common Seller and the Preferred Seller shall deliver, or shall cause to be delivered, to Buyer any documents required to be delivered by the Sellers pursuant to Section 5.12. (c) At the Closing, the Company shall deliver, or shall cause to be delivered, to Buyer the following: (i) certificate of the Secretary of State of the State of Kentucky as to the good standing of the Company dated as of a date not earlier than five Business Days prior to the Closing Date; and 11 17 (ii) a true copy of the Amended Articles of Incorporation of the Company certified as being true and correct by the Secretary of State of the State of Kentucky as of a date not earlier than five (5) Business Days prior to the Closing; (iii) a copy of the bylaws, and all amendments thereto, of the Company as in effect at the time of the Closing certified as true and correct by the Secretary of the Company; (iv) documents required to be delivered by the Company pursuant to Section 5.17; and (v) documents required to be delivered by the Company pursuant to Section 6.1. (d) At the Closing, Buyer Parent and Buyer shall deliver, or shall cause to be delivered the documents required to be delivered pursuant to Section 6.2. Section 2.11 Legending of Securities. The shares of Parent Stock to be issued in connection with this Agreement will be issued in a transaction exempt from registration under the Securities Act by reason of Section 4(2) thereof or Regulation D promulgated thereunder. Buyer Parent is relying on the representations of the Company and the Sellers with respect to such exemption. Stop transfer instructions will be given to Buyer Parent's transfer agent that shall only be applicable to a sale or other transfer within the United States with respect to the shares of Parent Stock received by each Seller pursuant to the Merger contemplated hereby and there will be placed on the certificates for such shares, or shares issued in substitution thereof, a legend stating in substance: "The securities evidenced by this certificate have been issued and sold without registration under the United States Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state of the United States (a "State Act") in reliance upon certain exemptions from registration under said Acts. The securities evidenced by this certificate cannot be sold, assigned or otherwise transferred within the United States unless such sale, assignment or other transfer is (1) made pursuant to an effective registration statement under the Securities Act and in accordance with each applicable State Act or (2) exempt from, or not subject to, the Securities Act and each applicable State Act. If the proposed sale, assignment or other transfer within the United States will be made pursuant to clause (2) above, the holder must, prior to such sale, assignment or other transfer, furnish to the 12 18 issuer such certifications, legal opinions and other information as the issuer may reasonably require to determine that such sale, assignment or other transfer is being made in accordance with such clause." The foregoing legend will also be placed on any certificate representing securities issued subsequent to the original issuance of the Parent Stock pursuant to the Merger as a result of any transfer of such shares or any stock dividend, stock split, or other recapitalization as long as the Parent Stock issued pursuant to the Merger has not been transferred in such manner to justify the removal of the legend therefrom. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE COMPANY Each Common Seller severally as to the representations and warranties relating to such Common Seller in Sections 3.3 and 3.4, and jointly and severally as to all other representations and warranties contained in this Article III, represents and warrants to Buyer and Buyer Parent and the Preferred Seller severally as to the representations and warranties in Sections 3.3, 3.4, 3.5, 3.11(b), 3.24 and 3.25 solely as such matters therein are applicable to the Preferred Seller, represents and warrants to Buyer and Buyer Parent, as follows: Section 3.1 Organization and Related Matters. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Kentucky and has the requisite legal power and authority to carry on its Business as now being conducted and to own, lease and operate all of its properties and assets, and is duly qualified to do business in each jurisdiction shown in Section 3.1 of the Company Disclosure Memorandum in which the nature of the Business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such registration, qualification or licensing necessary, except where the failure to be so qualified would not have a Company Material Adverse Effect. Section 3.2 Capital Structure. (a) The authorized Capital Stock of the Company consists of (i) 2,000 shares of Common Stock, of which 101 shares as of the date hereof are issued and outstanding and (ii) 1 share of Preferred Stock, which is issued and outstanding. All of the outstanding shares of Capital Stock have been duly authorized and validly issued and are fully paid and nonassessable and are owned beneficially and of record by the Sellers in the respective amounts specified on Section 3.2(a) of the Company 13 19 Disclosure Memorandum, and none of such shares were issued in violation of any preemptive rights or Applicable Law. Except as set forth in Section 3.2(a) of the Company Disclosure Memorandum, there are no outstanding options, warrants, calls, rights, commitments, agreements, arrangements or undertakings to which the Company is a party or by which the Company is bound obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of Capital Stock or obligating the Company to issue, grant or enter into any such option, warrant, call, right, commitment, agreement, arrangement or undertaking. Except as set forth in Section 3.2(a) of the Company Disclosure Memorandum, there are no outstanding contractual obligations or arrangements of the Company or any shareholder of the Company to repurchase, redeem or otherwise acquire any shares of Capital Stock of the Company. (b) Subsidiaries. The Company does not have any subsidiaries and does not own beneficially, directly or indirectly, any securities, rights or interests of any Person, or any interest in a partnership or joint venture of any kind, except for such securities, rights or interests beneficially owned on behalf of an Investment Company or Client. Section 3.3 Title. Each Common Seller and the Preferred Seller owns, and will own at the time of Closing, in each case beneficially and of record, the shares of Common Stock and Preferred Stock, respectively, of the Company set forth in Section 3.2(a) of the Company Disclosure Memorandum, free and clear of any Encumbrances other than any Encumbrance created by or attributed to the Buyers. Section 3.4 Authority; No Violation. (a) The Company, the Preferred Seller and each Common Seller that is not a natural person have full legal power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by the Management Committee of the Company which has unanimously recommended that the Company's shareholders approve this Agreement and the transactions contemplated herein. After full disclosure of this Agreement and the transactions contemplated herein (including all employment, compensation and other arrangements with any officer, director or shareholder of the Company) by the directors and officers of the Company to all of the Company's shareholders, all holders of the capital stock of the Company having the right to vote upon the Merger (including by all holders of capital stock of the Company having the right to vote upon the Merger separately as a class) have duly and validly approved this Agreement and the transactions contemplated hereby, and no other proceedings on the part of the Company or any 14 20 shareholder or class of shareholders of the Company are necessary to approve this Agreement or to consummate the transactions contemplated hereby. Each Common Seller that is a natural person has full capacity to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company, each Common Seller and the Preferred Seller and (assuming the due authorization, execution and delivery of this Agreement by Buyers) constitutes a valid and binding obligation of the Company, each Common Seller and the Preferred Seller, enforceable against the Company, each such Common Seller and the Preferred Seller in accordance with its terms, except as enforcement may be limited by general principles of equity whether applied in a court of law or court of equity and by bankruptcy, insolvency, moratorium and similar laws affecting creditors' rights and remedies generally. (b) Neither the execution and delivery of this Agreement by the Company, any Common Seller or the Preferred Seller, nor the consummation by the Company, any such Common Seller or the Preferred Seller, of the transactions contemplated hereby to be performed by them, nor compliance by the Company, any such Common Seller or the Preferred Seller with any of the terms or provisions hereof, will (i) violate any provision of the Organizational Documents of the Company or the Preferred Seller, or (ii) assuming the Consents set forth in Section 3.5 of the Company Disclosure Memorandum hereof are duly obtained (A) violate any Applicable Law applicable to the Company, any Common Seller or the Preferred Seller, or to any of their properties, Contracts or assets, or (B) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any material Encumbrance upon, any of the assets of the Company, any Common Seller or the Preferred Seller, or any Contract, Lease, Indebtedness, note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company, any Common Seller or the Preferred Seller is a party, or by which the Company, any such Common Seller or the Preferred Seller, or any of their properties or assets, may be bound or affected, except, in the case of this clause (ii), any Permitted Encumbrance or such violation, conflict, breach, losses, default, termination, cancellation or Encumbrance which is not a Permitted Encumbrance and which would not individually or in the aggregate have a Company Material Adverse Effect. Section 3.5 Consents and Approvals. Except for (a) such Consents and notices as are set forth in Section 3.5 of the Company Disclosure Memorandum, (b) the applicable filings under the HSR Act, and (c) such other Consents the failure of 15 21 which to be made or obtained are not reasonably expected to have a Company Material Adverse Effect, no Consents with any Governmental Authority or third party are necessary in connection with (i) the execution and delivery by the Company, each Common Seller and the Preferred Seller of this Agreement and (ii) the consummation by the Company, each such Common Seller and the Preferred Seller of the transactions contemplated hereby. Neither any Common Seller nor the Preferred Seller is aware of any reason that would cause the Consents of any Governmental Authority or third party to this Agreement and the transactions provided for herein as such Consents relate to such Common Seller or the Preferred Seller, as the case may be, to not be received without undue delay, and without the imposition thereon of conditions, restrictions or requirements that, individually or in the aggregate, could reasonably be expected to have a Company Material Adverse Effect or a material adverse effect on the Surviving Corporation. Section 3.6 Government Regulation. (a) Filings. The Company is duly registered or licensed in the capacities shown in Section 3.6(a) of the Company Disclosure Memorandum, and has filed, and each Investment Company for which the Company is an investment advisor, sub-advisor, underwriter or sponsor and, to the knowledge of the Common Sellers, each Investment Company for which the Company serves as a subadviser, has filed, all material registrations, reports, statements, notices and other material filings required under Applicable Law to be filed with the SEC and any other Governmental Authority (other than a Taxing Authority) by the Company, to the extent applicable, including all material amendments or supplements to any of the above (the "Filings") for the past five years. The Filings complied in all material respects, where applicable, with the requirements of the Exchange Act, the Advisers Act, the Investment Company Act and all other Applicable Laws and did not contain any untrue statement of material fact or omit to state a material fact required to be stated therein, or necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. The Company has made or will make available to the Buyers complete and correct copies of (i) all Filings made within the past five (5) years (including, but not limited to all filings on Form ADV), (ii) all audit or inspection reports received by the Company from the SEC or any other Governmental Authority (other than a Taxing Authority) and all written responses thereto made by the Company during the past five (5) years, (iii) copies of all inspection reports provided to the Company by the SEC or any other Governmental Authority (other than a Taxing Authority) during the past five years, and (iv) all correspondence relating to any investigation provided to the Company by the SEC or any other Governmental Authority (other than a Taxing Authority) during the past two years. Except as set forth in Section 3.6(a) of the Company Disclosure Memorandum, as of the date of this Agreement, there is no material unresolved 16 22 violation, criticism, or exception by any Governmental Authority (other than a Taxing Authority) with respect to any report or statement relating to any examinations or inspections of the Company or any Investment Company where the Company serves as investment adviser, or as a sponsor or underwriter. The Company has not received, since December 31, 1999, any notification or communication from any Governmental Authority (other than a Taxing Authority) (i) asserting that the Company is not in compliance with any of the Applicable Laws which such Governmental Authority enforces or (ii) threatening to revoke, limit or suspend any Permit or Consent. (b) Advisers Act. (i) Except for the Company, no Affiliate of the Company has been during the past five years an "investment adviser" required to be registered, licensed or qualified as an investment adviser under the Advisers Act or other Applicable Law or subject to any material liability or disability by reason of any failure to be so registered, licensed or qualified, except for any such failure to be so registered, licensed or qualified that are not, individually or in the aggregate, reasonably expected to have a Company Material Adverse Effect. (ii) The Company is, and at all times required by the Advisers Act during the past five years has been, duly registered as an investment adviser under the Advisers Act. The Company is, and at all times required by Applicable Law (other than the Advisers Act) during the past five years has been, duly registered, licensed or qualified as an investment adviser in each state or any other domestic or foreign jurisdiction where the conduct of its Business required such registration, licensing or qualification, except for any such failure to be so registered, licensed or qualified that, individually or in the aggregate, is not reasonably expected to have a Company Material Adverse Effect. Each such United States federal and state registration, license or qualification, as of the date hereof, is listed in Section 3.6(b) of the Company Disclosure Memorandum and is in full force and effect. (iii) Neither the Company nor any "affiliated person" (as defined in the Investment Company Act) thereof, is ineligible pursuant to Section 9(a) or (b) of the Investment Company Act to serve as an investment advisor (or in any other capacity contemplated by the Investment Company Act) to an Investment Company registered under the Investment Company Act; and, to the knowledge of the Common Sellers, neither the Company nor any "associated person" (as defined in the Advisers Act) thereof, is ineligible pursuant to Section 203 of the Advisers Act to serve as an investment adviser or as an associated person to a registered investment adviser. 17 23 (iv) The Company's advertising and solicitation of business has complied and will comply in all material respects with all Applicable Laws, including Section 206 of the Advisers Act, SEC Rules 204-2(a)(16) and 206(4)-1 under the Advisers Act, and the Association for Investment Management and Research ("AIMR") Performance Presentations Standards. (c) Investment Company Act. (i) Section 3.6(c) of the Company Disclosure Memorandum sets forth a true, complete and correct list, as of the date hereof, of each Registered Fund. Other than with respect to the Registered Funds listed in Section 3.6(c) of the Company Disclosure Memorandum, the Company does not serve as an adviser or subadviser with respect to any Investment Company whether or not required to be registered under the Investment Company Act. Each Registered Fund for which the Company serves as an adviser, and to the knowledge of the Common Sellers, each Registered Fund for which the Company acts as a subadviser, that is an entity is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has the requisite power and authority to own its properties and to carry on its Business as it is now conducted, and is qualified to do business in each jurisdiction where it is required to do so under Applicable Law, except where the failure to have such power, authority or qualification is not reasonably expected to have a Company Material Adverse Effect. Each Registered Fund for which the Company serves as an adviser, and to the knowledge of the Common Sellers, each Registered Fund for which the Company acts as a subadviser, that is an entity is, and at all times as required under Applicable Law has been, duly registered with the SEC as an investment company under the Investment Company Act. (ii) With respect to each Registered Fund for which the Company serves as an adviser, and to the knowledge of the Common Sellers, each Registered Fund for which the Company acts as a subadviser, the outstanding shares or other equity interests of each Registered Fund listed in Section 3.6(c) of the Company Disclosure Memorandum have been duly and validly issued and are fully paid and nonassessable and the shares of each Registered Fund are qualified for public offering and sale in each jurisdiction where offers or sales have been made or are being made to the extent required under Applicable Law. 18 24 (iii) Each Registered Fund for which the Company serves as an adviser, and to the knowledge of the Common Sellers, each Registered Fund for which the Company acts as a subadviser, of the Company Disclosure Memorandum has at all times been operated and is currently operating in compliance in all material respects with Applicable Law, except for such instances of non-compliance which, individually or in the aggregate, are not reasonably expected to have a Company Material Adverse Effect. Each current prospectus or offering document (including any related statement of additional information), as amended or supplemented, relating to each Registered Fund for which the Company serves as an adviser, and to the knowledge of the Common Sellers, each Registered Fund for which the Company acts as a subadviser, of the Company Disclosure Memorandum, is in substantial compliance with the requirements of the Securities Act and the Investment Company Act, and other Applicable Laws. None of such prospectuses or offering documents, amendments or supplements, as of their respective dates, includes or included an untrue statement of a material fact or omits or omitted to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. (iv) Each Registered Fund for which the Company serves as an adviser, and to the knowledge of the Common Sellers, each Registered Fund for which the Company acts as a subadviser, is duly registered with the SEC as an Investment Company under the Investment Company Act and each is governed by an Investment Company Board consisting of at least 50% of directors who are not "interested persons" (as defined in the Investment Company Act) of the Investment Company or the Company. Each such Registered Investment Company operates in all material respects in conformity with the requirements and restrictions of Sections 10 and 16 of the Investment Company Act, to the extent applicable. (v) The Company has made available to the Buyer Parent copies of the audited financial statements (including the notes thereto) of each Registered Fund for which the Company serves as an adviser as of and for each of the three most recent fiscal years, the related audited statements of operations and changes in net assets for the two most recent fiscal years (or such shorter period as any Registered Fund has been in operation), and the related schedules of portfolio investments for the two most recent fiscal years. The Company has also made available to the Buyer Parent copies of the unaudited statement of assets and liabilities of each such Registered Fund as of the most recent semi-annual period, and the related unaudited statements of operations and changes in net assets for such semi-annual period and the related schedules of portfolio investments for the two most recent fiscal years. 19 25 With respect to each Registered Fund for which the Company serves as an adviser, the audited and unaudited financial statements of each such Registered Fund referred to above have been prepared in accordance with GAAP and present fairly, in all material respects, the financial condition (including asset valuations) as of such dates and the results of operations for such periods of such Registered Fund subject, in the case of the unaudited financial statements, to normal, recurring year-end adjustments and the lack of footnotes and other presentation items. (vi) To the knowledge of the Common Sellers, each such Registered Fund has been operated or managed in compliance in all material respects with its respective objectives, policies and restrictions, including those set forth in the prospectus and statement of additional information or other offering materials for each such Registered Fund. (vii) There are no legal or governmental actions or proceedings pending or, to the knowledge of the Common Sellers, threatened against any of the Registered Funds for which the Company serves as adviser; nor, to the knowledge of the Common Sellers, are there any legal or governmental investigations pending or threatened against any of such Registered Funds; nor is there any Order (or, to the knowledge of the Common Sellers, any investigation) of any Governmental Authority (other than a Taxing Authority) outstanding against any of such Registered Funds. With respect to each Registered Fund for which the Company serves as an adviser, and to the knowledge of the Common Sellers, each Registered Fund for which the Company acts as a subadviser, neither the SEC, the NASD, nor any other Governmental Authority, has identified any material issue by means of any deficiency letter or other similar written inquiry relating to any such Registered Fund or its operations that has not been resolved. (viii) All material Contracts, including all advisory and sub-advisory agreements, all Services Agreements and all Distribution Agreements to which any Registered Fund for which the Company serves as adviser is a party or by which such Registered Fund or its property is bound (other than Contracts for an individual purchase or sale of portfolio securities) have been previously disclosed to Buyers. Each such Contract for a Registered Fund for which the Company serves as an adviser, and to the knowledge of the Common Sellers, for a Registered Fund for which the Company acts as a subadviser, that is subject to Section 15 of the Investment Company Act (i) has been duly approved, executed, delivered and renewed in compliance in all material respects with Section 15 of the Investment Company Act and, if applicable, SEC Rule 12b-1 under the Investment Company Act, and (ii) is 20 26 currently in full force and effect and has been performed by the relevant entity in accordance with the Investment Company Act. To the knowledge of the Common Sellers, neither such Registered Fund nor one of the other parties to such Contracts is in material default under, and, to the knowledge of Common Sellers, no event has occurred which, with the passage of time or giving of notice or both, would result in such Registered Fund or any of the other parties to such Contracts being in material default under, any of the terms of such Contracts. Any Service Agreements between the Company and any Registered Fund for which the Company serves as an adviser, and to the knowledge of the Common Sellers, for a Registered Fund for which the Company acts as a subadviser, are valid and enforceable, and the amounts paid to the Company under such Service Agreements have been properly determined in accordance with the terms thereof. (ix) Each Registered Fund for which the Company serves as adviser has in full force and effect such insurance as is required by the Investment Company Act and has directors' and officers' and errors and omissions insurance policies issued in amounts reasonably believed to be adequate and appropriate by its Investment Company Board of Directors. No such Registered Fund is in default under any such insurance policy. All premiums that are due and payable under such policies have been paid. (x) Neither the Company nor any of its respective officers, directors or employees has any express or implied understanding or arrangement that would impose an unfair burden on any Registered Fund for which the Company serves as adviser or that would in any way violate Section 15(f) of the 1940 Act as a result of this transaction. (d) Other Registrations. Each Common Seller or other employee of the Company who is required to be registered as a registered representative, investment adviser representative or a sales person with the SEC or an equivalent person with the securities commission of any other Governmental Authority is duly registered as such and such registration is in full force and effect, except where the failure to be so registered or to have such registration in full force and effect could not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Section 3.7 Properties. Section 3.7 of the Company Disclosure Memorandum sets forth a complete and correct list, as of the date hereof, of (i) all Leases of real property and the location of the applicable property, and (ii) all Leases of personal property providing for annual rentals of more than $50,000 or aggregate rentals of more than $100,000. The Company has heretofore provided or made 21 27 available to Buyer a true, correct and complete copy of each Lease, together with all amendments, modifications, alterations, and other changes thereto. The Company does not own any real property. The Company has valid title to all personal property owned by it, and valid leasehold interests in all real and personal property leased by it, in each case free and clear of all Encumbrances other than Permitted Encumbrances. Except as set forth in Section 3.7 of the Company Disclosure Memorandum, (i) each Lease is in full force and effect in all material respects, and (ii) there does not exist under any Lease any material event of default, or any event or condition that, after notice or lapse of time or both, would constitute a material event of default, on the part of the Company or, to the knowledge of the Common Sellers, on the part of any other party to any material Contract. Section 3.8 Financial Statements. The Company has previously delivered or made available to Buyer Parent, copies of its audited financial statements for the period commencing on March 1, 1998 and ending December 31, 1998 and for the twelve month periods ending December 31, 1999 and December 31, 2000, including balance sheets as of December 31, 1998, 1999 and 2000, and statements of income and retained earnings and statements of cash flows for the above described periods, and its unaudited balance sheet as of the end of the latest calendar month for which such balance sheet is available and statement of income for the period from January 1, 2001 through and including the latest calendar month for which such statement of income is available (collectively, such statements being referred to as the "Financial Statements"). The balance sheets referred to in this Section 3.8 present fairly, in all material respects, the financial position of the Company as of the dates thereof, and the other Financial Statements referred to in this Section 3.8 present fairly, in all material respects, the results of the Company's operations and cash flows for the periods therein set forth subject to, in the case of the unaudited Financial Statements, recurring audit adjustments normal in nature and amount. The Financial Statements comply in all material respects with applicable accounting requirements with respect thereto; and each of such statements (including the related notes, where applicable) has been prepared in accordance with GAAP consistently applied during the periods involved (except, in the case of such unaudited Financial Statements, for the absence of footnotes and recurring year end audit adjustments normal in nature and amount). (a) Except as set forth in Section 3.8(b) of the Company Disclosure Memorandum, the Company is not subject to any obligation or liability of any nature, whether absolute, accrued, contingent or otherwise and whether due or to become due, and, to the knowledge of the Common Sellers, there is no existing condition, situation or set of circumstances which are reasonably expected to result in such an obligation or liability, other than (i) obligations and liabilities contemplated by or in connection with this Agreement or the transactions contemplated hereby, (ii) as and 22 28 to the extent disclosed or fully reserved against in the audited consolidated balance sheet as at December 31, 2000 included in Financial Statements, (iii) obligations and liabilities incurred since December 31, 2000 in the ordinary course of business consistent with past practices and not prohibited by this Agreement, or (iv) obligations and liabilities that could not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Section 3.9 Absence of Changes. Since December 31, 2000, except (i) as set forth in Section 3.9 of the Company Disclosure Memorandum, (ii) as specifically reflected or reserved against in the Financial Statements, or (iii) as contemplated by or in connection with this Agreement or the transactions contemplated hereby, the business of the Company has been conducted in the ordinary course consistent with past practices and the Company has not: (a) undergone any change in its business, financial condition, results of operations or properties (other than changes resulting solely from general economic or political conditions, including but not limited to changes in the net asset value of any Registered Fund for which the Company serves as adviser resulting from fluctuations in market price) that, individually or in the aggregate, has had or could reasonably be expected to have a Company Material Adverse Effect; (b) In the case of the Company or any Registered Fund for which the Company serves as adviser, declared, set aside, made or paid any dividend or other distribution in respect of its capital stock or repurchased, redeemed or otherwise acquired any shares of its capital stock, except, (i) any dividends declared, set aside or paid on the Preferred Stock in accordance with the terms set forth in the Organizational Documents of the Company and (ii) in the case of any Registered Fund for which the Company serves as adviser, in the ordinary course of business consistent with past practices and Applicable Law; (c) issued, sold, granted or awarded any shares of its capital stock of any class or any Rights of any kind to purchase any such shares or any securities convertible into or exchangeable for any such shares; (d) incurred, assumed, guaranteed (including by way of any agreement to "keep well" or of any similar arrangement) or prepaid any Indebtedness or amended the terms relating to any Indebtedness, or issued or sold any debt securities, except for any such incurrence, assumption, guarantee or prepayment of such Indebtedness or amendments of the terms of such Indebtedness in the ordinary course of business consistent with past practices in an aggregate amount not exceeding $50,000; 23 29 (e) sold, transferred, assigned, conveyed, mortgaged, pledged or otherwise subjected to any Encumbrances any of its properties or assets, tangible or intangible, except for Permitted Encumbrances or in the ordinary course of business consistent with past practices; (f) entered into (i) any agreement or commitment involving more than $50,000 that, pursuant to its terms, is not cancelable without penalty or charge on thirty (30) days' notice or less or (ii) any other agreement, commitment or other transaction, other than (A) any agreement, commitment or other transaction involving an expenditure of not more than $50,000 or (B) Investment Management Agreements, entered into in the ordinary course of business consistent with past practices; (g) paid (or committed to pay) any bonus or other incentive compensation to any director, partner, officer, other employee or sales representative or granted (or committed to grant) to any director, partner, officer, employee or sales representative any other increase in compensation, except for (i) bonuses or incentive compensation payable pursuant to a plan set forth in Section 3.15 of the Company Disclosure Memorandum, base salary or wage increases, in each case in the ordinary course of business consistent with past practices or pursuant to the terms of any written agreement or commitment existing at December 31, 2000, and (ii) severance or termination payments not to exceed, in the aggregate, $50,000; (h) entered into, adopted or amended (or committed to enter into, adopt or amend) in any material respect any employment, retention, change in control, collective bargaining, deferred compensation, severance, retirement, bonus, profit-sharing, stock option or other equity, pension or welfare plan or agreement maintained for the benefit of any director, partner, officer, other employee or sales representative; (i) suffered any strike or other labor dispute that has had or could reasonably be expected to have a Company Material Adverse Effect; (j) suffered any loss of employees or investment advisory clients that has had or is reasonably expected to have a Company Material Adverse Effect; (k) amended its articles of incorporation or bylaws or any other Organizational Documents; (l) granted any rights or licenses under any of its trademarks or trade names or other Intellectual Property or entered into any licensing or similar 24 30 agreements or arrangements, in each case other than in the ordinary course of business consistent with past practices; (m) made any material changes in its general policies or practices relating to selling practices, discounts or other material terms of sale or accounting therefor, including any changes in loads, 12b-1 or advisory or other fees with respect to any Registered Fund for which the Company serves as adviser; (n) in the case of any Registered Fund for which the Company serves as adviser, had any action taken by the Investment Company Board of such Registered Fund other than actions in the ordinary course of business consistent with past practices, actions customarily taken by similarly situated Investment Company Board of Investment Companies or actions contemplated by or in connection with this Agreement; (o) changed in any material respect its accounting practices, policies or principles, other than any such changes as may be required under GAAP; (p) amended or agreed to amend its general fee schedule; (q) suffered any damage, destruction or other casualty loss (whether or not covered by insurance) affecting its properties or assets which, individually or in the aggregate, is reasonably expected to have a Company Material Adverse Effect; or (r) taken any action or omitted to take any action that would result in the occurrence of any of the foregoing. Section 3.10 Contracts. (a) Section 3.10(a) of the Company Disclosure Memorandum sets forth a correct and complete list, as of the date hereof, of all Contracts the annual revenue or cost to the Company of which exceeds $50,000. The Company has delivered to Buyer for inspection complete and correct copies of all such Contracts, including fee schedules, where applicable. (b) Except as set forth in Section 3.10(b) of the Company Disclosure Memorandum, and excluding any failure to obtain Consents with respect to the Contracts with those Clients listed in Section 3.10(c) of the Company Disclosure Memorandum (i) each Contract is in full force and effect in all material respects, and (ii) there does not exist under any Contract any event of default, or any event or condition that, after notice or lapse of time or both, would constitute an event of default, on the part of the Company or, to the knowledge of the Common Sellers, on 25 31 the part of any other party to any Contract, where any such default could reasonably be expected to have a Company Material Adverse Effect. Except as disclosed in Section 3.10(b) of the Company Disclosure Memorandum, the Company is not subject to any contract, agreement, license or commitment materially restricting or limiting the type or scope of business or operations that it may conduct now or immediately after the Closing Date. (c) Except as set forth in Section 3.10(c) of the Company Disclosure Memorandum, as of the date hereof the Company has not received written notice from any Client of, and, to the knowledge of the Common Sellers, no such Client has stated orally, its intention to terminate its Investment Management Agreement with the Company. (d) As of the date hereof, the Company has not received written notice from any selling agent that is a party to any Distribution Agreement of, and, to the knowledge of the Common Sellers, no such selling agent has stated orally, its intention to terminate its Distribution Agreement (other than terminations initiated by any the Company due to a breach by such selling agent). (e) Each Contract for investment advisory services has been duly authorized, executed and delivered by the Company and, to the knowledge of the Common Sellers, each other party thereto and, to the extent applicable, has been adopted in compliance with Section 15 of the Investment Company Act and Section 205 of the Advisers Act and complies with Applicable Law and is a valid and binding agreement of each such party, enforceable in accordance with its terms (subject to bankruptcy, insolvency, moratorium, fraudulent transfer and similar laws affecting creditors, rights generally and to general equity principles) and (ii) the Company and, to the knowledge of the Common Sellers, the other party thereto is in compliance in all material respects with the terms of each such Contract, and no event has occurred or condition exists that constitutes or with notice or the passage of time could constitute a material default by the Company thereunder. (f) Section 3.10(f) of the Company Disclosure Memorandum includes a listing of all wrap account agreements, the sellers of such wrap accounts, and the selling or sponsoring broker-dealer organizations and a schedule of fees for each sponsoring broker-dealer organization. To the knowledge of the Common Sellers, all wrap accounts are offered and sold in compliance with all Applicable Laws, including the requirements for delivery of the Company's Form ADV, Part II and the requirements of Rule 3a-4 under the Investment Company Act, and are exempt from registration or qualification under Applicable Laws, including federal, state, local and foreign securities laws. 26 32 Section 3.11 No Other Brokers. (a) Other than Putnam Lovell Securities Inc., the fees and expenses of which will be paid by the Company, no broker, finder or similar intermediary has acted for or on behalf of or is entitled to any broker's, finder's or similar fee or other commission from the Company or the Common Seller in connection with this Agreement or the transactions contemplated hereby. The Preferred Seller has no obligation to pay any investment banking or similar fees or legal fees to either Putnam Lovell Securities Inc. or Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Company, in connection with this Agreement or the transactions contemplated hereby. (b) The Preferred Seller has not retained or otherwise used any broker, finder or similar intermediary to act on its behalf nor is any Person entitled to any broker's, finder's or similar fee or other commission from the Preferred Seller in connection with this Agreement or the transactions contemplated hereby. Section 3.12 Legal Proceedings. There are no legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature that are pending or, to the knowledge of the Common Sellers, have been threatened in writing, against the Company or any of its properties or assets which (a) individually or in the aggregate, are reasonably expected to have a Company Material Adverse Effect or (b) challenge the validity of the transactions contemplated by this Agreement, and there is no injunction, order, judgment, decree, or regulatory restriction imposed upon the Company or any of its properties or assets which, individually or in the aggregate, is reasonably expected to have a Company Material Adverse Effect. Section 3.13 Compliance with Applicable Law. (a) The Company holds, and has at all times during the past five (5) years held, all material Permits necessary for the lawful ownership and use of its properties and assets and the conduct of its Business under and pursuant to, and has complied in all material respects with, and is not in violation in any material respect of, any Applicable Law relating to the Company or any of its assets, properties or operations (including, without limitation, the Securities Act, Advisers Act, the Investment Company Act and the Exchange Act and similar state and foreign laws). To the knowledge of the Common Sellers, the Company is not in violation or any Applicable Law relating to it, except any such violations which, individually or in the aggregate, would not have a Company Material Adverse Effect. All Permits are in full force and effect and are not subject to any suspension, modification or revocation or proceedings related thereto. 27 33 (b) Except for normal examinations or inspections conducted by any Governmental Authority in the regular course of the Business of the Company and any Registered Fund for which the Company serves as adviser and, to the knowledge of the Common Sellers, any Registered Fund for which the Company serves as subadviser, and which examinations are described in Section 3.13(b) of the Company Disclosure Memorandum, since December 31, 1999, (i) no Governmental Authority has initiated any administrative proceeding or, to the knowledge of the Common Sellers, investigation into the Business or operations of the Company or such Registered Fund and (ii) the Company has not received any written notice of any unresolved violation or exception by any Governmental Authority with respect to any report or statement by any Governmental Authority relating to any examination or inspection of the Company. Copies of all reports or letters with respect to any such examinations or investigations have been provided to Buyer Parent. Section 3.14 Insurance. The Company maintains with reputable insurers, insurance and indemnity bonds providing reasonably adequate coverage for the Company against risks normally insured or bonded against by companies in similar lines of business. All such insurance policies and bonds are listed in Section 3.14 of the Company Disclosure Memorandum. Each such insurance policy or bond is in full force and effect, and the Company has not received written notice or any other indication from any insurer or agent of any intent to cancel any such insurance policy or bond. All premiums due on the insurance have been paid, and the Company will maintain such insurance policies from the date of this Agreement through the Closing Date. Renewals and replacements of insurance coverage over the past year by the Company has been at rates that are not materially higher than during the preceding year. Section 3.15 Employee Benefit Plans; ERISA. (a) Section 3.15(a) of the Company Disclosure Memorandum sets forth a true and complete list of each material bonus, deferred compensation, incentive compensation, stock purchase, option, employment, consulting, severance or termination pay, hospitalization or other medical, life or other insurance, supplemental unemployment benefits, profit-sharing, pension or retirement plan, program, agreement or arrangement, and each other fringe benefit plan, including each "employee benefit plan" (within the meaning of Section 3(3) of ERISA), whether formal or informal, written or oral and whether legally binding or not, that is maintained or contributed to or was maintained or contributed to at any time by the Company or any ERISA Affiliate for the benefit of any employee, former employee, spouse, dependent, director, independent contractor or consultant of the Company as to which the Company or any ERISA Affiliate has any liability (each, a "Plan"). 28 34 (b) With respect to each Plan, the Company has made available to Buyer true and complete copies of each of the following documents: (i) a copy of the Plan (including all amendments thereto); (ii) a copy of any annual return required under ERISA or other applicable law with respect to each such Plan for the three most recently completed plan years; (iii) a copy of any actuarial report required under ERISA or other applicable law with respect to each such Plan for the three most recently completed plan years; (iv) a copy of the most recent summary plan description and any summaries of material modifications thereto; (v) if the Plan is funded through a trust or any third party funding vehicle, a copy of the trust or other funding agreement (including all amendments thereto) and the most recent financial statement related thereto; (vi) all contracts relating to any Plan with respect to which the Company has any material liability; and (vii) except as set forth in Section 3.15(b) of the Company Disclosure Memorandum, the most recent determination letter received from the IRS with respect to each Plan that is intended to be qualified under Section 401 of the Code. (c) (i) No Plan is or has ever been a "multiemployer plan," as such term is defined in Section 3(37) of ERISA and no Plan is subject to Title IV of ERISA; (ii) each Plan has been operated in all material respects in accordance with the requirements of all Applicable Law; (iii) each Plan that is intended to be qualified under Code Section 401(a) has received an individual favorable IRS determination letter; (iv) to the knowledge of the Common Sellers, each of the Plans intended to be "qualified" within the meaning of Section 401(a) of the Code is so qualified and no Plan has an accumulated or waived funding deficiency within the meaning of Section 412 of the Code; and (v) neither of the Company nor any ERISA Affiliate has incurred, directly or indirectly, any liability (including any material contingent liability) pursuant to Title IV of ERISA that has not been satisfied in full, and neither the Company nor any ERISA Affiliate made, or was required to make, contributions to any plan subject to Title IV of ERISA (a "Title IV Plan") during the six year 29 35 period ending on the last day of the most recent Title IV Plan year ended prior to the Closing Date. (d) No Plan provides welfare benefits (as defined in Section 3(1) of ERISA) for periods extending beyond termination of service other than (i) coverage required to be provided under Applicable Law or (ii) as described in the Plan. (e) There are no pending or anticipated claims (other than routine claims for benefits) involving any Plan. (f) The consummation of the transactions contemplated by this Agreement will not (i) entitle any current or former employee or director of the Company to severance pay, unemployment compensation or any other similar payment, except as expressly provided in this Agreement or (ii) accelerate the time of payment or vesting or increase the amount of compensation or benefits due any such person. (g) Since the date of the most recent valuation, there has been no material change in the financial position of any Plan and no material increase in benefits under any Plan as a result of plan amendments. To the knowledge of the Common Sellers, no "party in interest" (as defined in Section 3(14) of ERISA) or "disqualified person" (as defined in Section 4975(e)(2) of the Code) with respect to any Plan has engaged in any nonexempt "prohibited transaction" (described in Section 4975(c) of the Code or Section 406 of ERISA). The Common Sellers have, or have reserved, the right to amend or terminate any Plan subject to ERISA at any time prior to the Closing Date. No material tax under Code Sections 4980B or 5000 has been incurred with respect to any Plan and, to the knowledge of the Common Sellers, no circumstances exist which could give rise to such taxes. (h) The Company has made appropriate entries in its financial records and statements for all Plan obligations that have accrued but that are not yet due. The value of all accrued deferred compensation entitlements (including entitlements under any executive compensation, supplemental retirement, or employment agreement) of employees and former employees of the Company and their respective beneficiaries have been fully reflected on the Company's financial statements. The Company has made all required contributions and payments under each Plan. Section 3.16 Technology and Intellectual Property. (a) Section 3.16(a) of the Company Disclosure Memorandum contains a true and complete list and description of each of the electronic data processing, communications, information, telecommunications and computer systems which are 30 36 material to the Business of the Company (collectively, the "Technology Systems"), including a description of any Software (other than readily available off-the-shelf software) and any material computer hardware systems owned, leased or used by any of them that is used in the operation of the Technology Systems and list of any material Contracts pursuant to which it is granted rights which are used in the operation of the Technology Systems, including soft dollar arrangements, Software licenses and similar agreements, as set forth in Section 3.10(a) of the Company Disclosure Memorandum. (b) Each of the Technology Systems is adequate for the conduct of the Business of the Company as currently operated. There has not been any material malfunction with respect to any of the Technology Systems currently in use. (c) Section 3.16(c) of the Company Disclosure Memorandum contains a true and complete list and description of all material Intellectual Property, including all patents and all registered trademarks, registered service marks and registered copyrights and applications therefor, owned by, or used in the Business or operations of, the Company (the "Company Intellectual Property"), and all material licenses, service marks or agreements pursuant to which the Company has granted or has been granted rights with respect to Intellectual Property not owned and used exclusively by it. (d) The Company has the right to use the Software and Company Intellectual Property in accordance with the terms of the relevant Contracts governing such use, free and clear of any claims by any Person (other than Permitted Encumbrances and the claims of any licensor under licensing or similar agreements), and the consummation of the transactions contemplated by this Agreement will not alter or impair the right of Buyer to use the Software or the Company Intellectual Property in connection with the Business of the Company as currently conducted by the Company to the same extent and on the same terms as the Company was entitled to use such Software and such Company Intellectual Property as of the date hereof, free and clear of any claims by any Person (other than Permitted Encumbrances and the claims of any licensor under licensing or similar agreements). No claim has been asserted, or to the knowledge of the Common Sellers threatened, by any Person to the effect that the use by the Company of any Company Intellectual Property violates or infringes upon the asserted rights of others, or that challenges or questions the validity or effectiveness of any license or similar agreement with respect to any Company Intellectual Property that is leased or licensed by the Company or the ownership by the Company of any Company Intellectual Property that the Company purports to own. As of the date hereof, none of the Software or the Company Intellectual Property is subject to any outstanding 31 37 order, judgment, decree, stipulation or agreement restricting the use thereof by the Company. Section 3.17 Taxes. (a) The Company has duly and timely filed all material Tax Returns required to be filed on or before the Closing Date and all such Tax Returns were correct and complete as filed. All Taxes that are or may become payable by the Company as of the Closing Date or chargeable as a lien upon its assets (whether or not shown on any Tax Return) with respect to any Tax period or portion thereof ending on or before the Closing Date have been either duly and timely paid or adequate provision has been made therefor on the Estimated Closing Balance Sheet. The aggregate of the reserves for Taxes contained on the Estimated Closing Balance Sheet will be adequate for all such Taxes payable or asserted to be payable by the Company for all relevant taxable periods or portions thereof through the Closing Date. The Company has made available to the Buyers complete and correct copies of all material Tax Returns filed by the Company. (b) Except as set forth on Schedule 3.17(b) of the Company Disclosure Memorandum, the Company has duly and timely withheld all employment and withholding Taxes required to be withheld, and such withheld taxes have been duly and timely paid to the proper Governmental Authorities or, if not yet due, properly set aside in accounts for such purpose. The Company is in compliance with all applicable information reporting and Tax withholding requirements under federal, state, and local Tax laws. (c) To the knowledge of the Company, no claim for taxes has been asserted, raised, or threatened in writing by a Governmental Authority against the Company in a jurisdiction in which the Company does not file Tax Returns. (d) Except as set forth on Section 3.17(d) of the Company Disclosure Memorandum, no Tax Return filed by the Company is currently under audit by any Governmental Authority. To the knowledge of the Company, no Taxes of the Company that may become payable following the Closing Date for periods ending on or prior to the Closing Date have been asserted in writing by any Governmental Authority to be due, and no report or assessment for any Taxes of the Company that may be payable following the Closing Date for periods ending on or prior to the Closing Date has been issued by any Governmental Authority in the course of any audit. To the knowledge of the Company, except as set forth on Section 3.17(d) of the Company Disclosure Memorandum, no Governmental Authority has asserted, raised or threatened against the Company any deficiency or claim for additional Taxes or any adjustment of Taxes. There is no other deficiency, claim or adjustment with respect to any Taxes of the Company, including Taxes of other persons for 32 38 which the Company may be liable under Section 1-1502-6 of the Treasury Regulations or any similar provision of Applicable Law, that may be payable following the Closing Date for periods ending on or prior to the Closing Date, or other pending audit of any Tax Return pertaining to the Company. (e) Except as set forth on Section 3.17(e) of the Company Disclosure Memorandum, the Company has not (x) waived any statute of limitations, (y) agreed to any extension of the period for assessment or collection of any Taxes, or (z) executed or filed any power of attorney with respect to any Taxes, which waiver, agreement or power of attorney is currently in force. (f) The Company has not filed a consent under Section 341(f) of the Code concerning collapsible corporations. (g) Except as set forth in Section 3.17(g) of the Company Disclosure Memorandum, the Company is not a party to, is not bound by and does not have any obligation under any Tax allocation, sharing, indemnity or similar agreement or arrangement. Except as set forth in Section 3.17(g) of the Company Disclosure Memorandum, the Company is not, nor at any time has it been, a member of any Affiliated Group nor does it have any liability for the Taxes of any person under Section 1.1502-6 of the United States Treasury Regulations, or any similar provision of state, local or foreign law, or as a transferee, successor, indemnitor or guarantor, by contract or otherwise. (h) The Buyers will not be required to deduct and withhold any amount pursuant to Sections 1445(a) or 3406 of the Code, or any other provision of law, upon the payment of the Merger Consideration pursuant to this Agreement. (i) The Company is not obligated to make any payments and is not a party to any agreement that could reasonably be expected to obligate it to make any payments that will not be deductible under Section 162(m) of the Code. (j) The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. (k) Except as set forth in Section 3.17(k) of the Company Disclosure Memorandum, there is no ruling received from, or closing agreement executed with, any Governmental Authority that will be binding upon the Company after the Closing Date with respect to Taxes. 33 39 (l) The Company has not had in any foreign country a permanent establishment, as defined in any applicable tax treaty or convention between the United States and such foreign country. The Company is not subject to Tax in any country other than the United States. (m) There has not been an ownership change, as defined in Section 382 of the Code, of the Company, that occurred during or after any period in which the Company incurred a net operating loss that carries over to any period ending after the Closing Date. (n) In the Merger, the Company will transfer to Buyer assets representing, at least ninety percent (90%) of the fair market value of the net assets and at least seventy percent (70%) of the fair market value of the gross assets held by the Company immediately prior to the Merger. For purposes of this representation, Company assets used to pay its reorganization expenses and all redemptions of stock and distributions with respect to stock (except for regular, normal dividends) made by the Company immediately preceding the transfer, will be included as assets of the Company immediately prior to the Merger. Except as set forth in this Agreement and the Company Disclosure Memorandum, the Company will pay no cash or other property to shareholders in connection with the Merger. In addition, assets disposed of by the Company in contemplation of the Merger will be considered assets held by the Company immediately prior to the Merger. (o) Other than cash paid to the Preferred Seller and the Common Sellers that have dissented from the Merger and perfected their rights of appraisal, during the preceding two years, neither the Company nor any Company Related Party has redeemed or acquired any Company Stock. (p) Except as set forth in this Agreement and the Company Disclosure Memorandum, neither the Company nor any Company Related Party has made any distribution with respect to the outstanding Capital Stock during the preceding two years other than periodic dividends consistent with the Company's historic dividend practice. (q) The liabilities of the Company assumed by Buyer and the liabilities to which the transferred assets of the Company are subject were incurred by the Company in the ordinary course of its business. (r) To the knowledge of the Company, the Company and the Sellers will pay their respective expenses, if any, incurred in connection with the transaction. 34 40 (s) The fair market value of the assets of the Company to be transferred to the Buyer will equal or exceed the sum of the liabilities assumed by Buyer or by Buyer Parent, plus the amount of the liabilities, if any, to which the transferred assets are subject. Section 3.18 Assets Under Management. As of the close of business on January 31, 2001 the aggregate amount of assets under management (i.e., assets as to which the Company is entitled to receive Asset Management Fees) (i) for the Registered Funds listed on Section 3.6(c) of the Company Disclosure Memorandum was approximately $645,801,217, (ii) for the Separate Accounts was approximately $15,256,192,937, and (iii) for the wrap accounts of the Company's Managed Accounts Group was approximately $1,554,561,375. Section 3.19 Affiliate Transactions. Section 3.19 of the Company Disclosure Memorandum sets forth a correct and complete list of all agreements, arrangements or other commitments in effect as of the date hereof (other than employment agreements listed in Section 3.10(a) of the Company Disclosure Memorandum) between the Company, on the one hand, and any officer, director or shareholder of the Company, on the other hand. A true and correct copy of each such agreement, arrangement or commitment (or if the same is oral, a true, correct and complete written description thereof) has heretofore been provided to the Buyers. Section 3.20 Labor Matters, etc. The Company is not a party to or bound by any collective bargaining or other labor agreement. The Company is currently in compliance with and for the past five (5) years has materially complied with all applicable provisions of Applicable Laws pertaining to the employment or termination of employment of its employees, except for any failures to comply that, individually or in the aggregate, could not reasonably be expected to have a Company Material Adverse Effect. Section 3.21 Derivative Products. All interest rate swaps, caps, floors, option agreements, futures and forward Contracts and other similar risk management arrangements, whether entered into for the Company's own account (all of which are listed on Section 3.21 of the Company Disclosure Memorandum), or for the account of one or more of the Company's Clients, were entered into (i) in accordance with prudent business practices to the extent entered into for the Company's own account, (ii) in accordance with Client guidelines to the extent entered into for Clients, (iii) in accordance with all Applicable Laws and (iv) to the knowledge of the Common Sellers, with counterparties that were financially responsible at the time; and each of them constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms (subject only to the bankruptcy, insolvency, moratorium, fraudulent transfer and similar laws affecting creditors' rights generally 35 41 and to general equity principles), and are in full force and effect. Neither the Company nor to the Company's knowledge any other party thereto, is in breach of any of its obligations under any such agreement or arrangement. Section 3.22 Books and Records. The books and records of the Company and its Subsidiaries and each Investment Company, Client and Account have been fully, properly and accurately maintained in all material respects, in compliance and there are no material inaccuracies or discrepancies of any kind contained or reflected therein, and they fairly present in all material respects the financial position of the Company, and the assets and performance of each Investment Company, Client and Account. The valuations of the assets and liabilities of each Investment Company, Client and Account have been supplied by sources that the Company believes are reasonably reliable and accurate, and, to the Common Sellers' knowledge, accurately reflect the fair market values of such assets and liabilities as of the dates thereof. Section 3.23 Environmental Matters. Except as set forth in Section 3.23 of the Company Disclosure Memorandum, and except for those matters which could not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect: (a) The Company and the Company Facilities are and have been in compliance with all Environmental Laws; (b) No events, facts or conditions will prevent, hinder or limit continued compliance by the Company and the Company Facilities with applicable Environmental Laws, and no material expenditures or commitments by the Company are planned or necessary to maintain continued compliance by the Company and the Company Facilities with applicable Environmental Laws as of the date of this Agreement or beyond the Effective Date; (c) The Company has obtained all Permits required pursuant to applicable Environmental Laws to carry on its business as now conducted; all such permits are in full force and effect and are not subject to any appeals or to any unsatisfied conditions which are required to be satisfied by the Closing Date; and no such permits are subject to any pending or threatened modification, suspension, revocation, rescission or cancellation; (d) The Company is not liable under any applicable Environmental Law with respect to the release, threatened release, or presence of any Hazardous Substance; 36 42 (e) No Hazardous Material which may require response or corrective action or remediation under any Environmental Law is present at, threatening, or emanating from any property presently owned or operated by the Company, or was present at or emanating from any other property when previously owned or operated by the Company; (f) The Company is not subject to any pending or threatened claim, or is obliged to comply with any judgment, order, ruling, settlement, or agreement arising under any Environmental Law; (g) The Company has not received any notice that it is a potentially liable party, that it is required to provide information, or that it or any of the Company Facilities is subject to an investigation in connection with any applicable Environmental Law; and (h) The Company has not entered into any negotiations or agreements either relating to any response or corrective action or remediation relating to liabilities or potential liabilities arising under any Environmental Law or providing any indemnification or renouncing indemnification claims for any liabilities arising under any Environmental Law. Section 3.24 Disclosure. The respective representations and warranties of the Common Sellers and the Preferred Seller contained herein do not contain any untrue statements of material fact or omit to state a material fact necessary to be stated or disclosed in order to make the statements contained in the representations and warranties, in light of the circumstances under which they were made, not misleading. Section 3.25 Investment. Each Seller hereby represents and warrants that the Parent Stock it will acquire pursuant to the Merger, and the Parent Stock it may acquire pursuant to the terms of Article II, are being, or will be, acquired by such Seller for its own account, not as a nominee or agent, and not with a view to, or for sale in connection with, any distribution thereof. Each Seller understands that the Parent Stock issuable pursuant to the Merger hereof, and the Parent Stock that may be issued pursuant to Article II hereof, have not been registered under the Securities Act, or any state securities laws, by reason of specific exemptions from the registration provisions of the Securities Act and such laws that may depend upon, among other things, the bona fide nature of the Sellers' investment intent as expressed herein. Each Common Seller that is a natural person and the Preferred Seller represents and warrants that he, she or it, as the case may be, is an "accredited investor" within the meaning of Regulation D promulgated by the SEC under the Securities Act. Each Seller has had an opportunity to ask questions and receive 37 43 answers concerning the terms and conditions of the Merger and related transactions, and to obtain any additional information that Buyer Parent possesses or can acquire without unreasonable effort, and that such Seller has received prior to the date hereof a copy of all Buyer Parent Reports that have been filed with the SEC. Each Seller further represents and warrants that it has such knowledge and experience in financial and business matters as to enable it (a) to utilize the information made available to it in connection with the transactions contemplated by this Agreement, (b) to evaluate the merits and risks associated with the acquisition of Parent Stock pursuant hereto, and (c) to make an informed decision with respect thereto. Each Seller's business and financial experience is such that the Buyers could reasonably assume such Seller has the capacity to protect its interests in connection with the offer, sale and issuance of the Parent Stock hereunder. Each Seller has reviewed with its tax advisor the United States federal, state, local and foreign tax consequences of an investment in Parent Stock and the transactions contemplated by this Agreement and reviewed with its legal counsel the United States, federal, state and foreign legal restrictions on transfers and resales of shares of Parent Stock issued pursuant to the terms of this Agreement. Each Seller is relying solely on such advisors with respect to such matters and not on any statements or representations of the Buyers or any of their agents. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER PARENT The Buyers, jointly and severally, represent and warrant to the Company and the Sellers as follows: Section 4.1 Organization and Related Matters. Buyer Parent and Buyer are corporations duly organized, validly existing and in good standing under the laws of the England and Wales and the State of Delaware, respectively. Each of Buyer and Buyer Parent has the power and authority to carry on its business as it is now being conducted and to own, lease and operate all of its properties and assets, and is duly qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such qualification necessary except where the failure to be so qualified would not have a Buyer Material Adverse Effect. 38 44 Section 4.2 Authority; No Violation. (a) Each of Buyer and Buyer Parent has full power and authority to execute and deliver this Agreement and take all actions necessary or appropriate to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by all requisite action on the part of Buyer and Buyer Parent, and no other proceedings on the part of Buyer or Buyer Parent are necessary to approve this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Buyer and Buyer Parent and (assuming the due authorization, execution and delivery of this Agreement by the Company and the Sellers) constitute a valid and binding obligation of Buyer and Buyer Parent, enforceable against Buyer and Buyer Parent in accordance with its terms, except as enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency, moratorium and similar laws affecting creditors' rights and remedies generally. (b) Neither the execution and delivery of this Agreement by Buyer or Buyer Parent, nor the consummation by Buyer or Buyer Parent of the transactions contemplated hereby to be performed by them, nor compliance by Buyer or Buyer Parent with any of the terms or provisions herein or therein, will (i) violate any provision of the Organizational Documents of Buyer or Buyer Parent or (ii) assuming that the Consents required of the Company in Section 5.3 hereof are duly obtained, (A) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Buyer or Buyer Parent or, any of their properties, contracts or assets or (B) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any material Encumbrance upon any assets of Buyer or Buyer Parent or any Contract, Lease or Indebtedness to which Buyer or Buyer Parent or any of their Affiliates is a party, or by which Buyer or Buyer Parent, or any of their properties or assets, may be bound or affected, except, in the case of this clause (ii), any such violation, conflict, breach, losses, default, termination, cancellation or Encumbrance which would not individually or in the aggregate have a Buyer Material Adverse Effect. Section 4.3 Consents and Approvals. Except for (a) Consents and notices as are set forth in Section 5.3, (b) the applicable filings under the HSR Act and (c) such other Consents the failure of which to be made or obtained are not reasonably expected to have a Buyer Material Adverse Effect, no Consents with any Governmental Authority or any third party are necessary in connection with (i) the execution and delivery by Buyer and Buyer Parent of this Agreement and (ii) the 39 45 consummation by Buyer and Buyer Parent of the transactions as contemplated hereby. The Buyers are not aware of any reason that would cause the Consents of any Governmental Authority or third party to this Agreement and the transactions provided for herein to not be received without undue delay or without the imposition thereon of conditions, restrictions or requirements that, individually or in the aggregate, could reasonably be expected to have a Company Material Adverse Effect or a material adverse effect on the Surviving Corporation. Section 4.4 Buyer Financing. Buyer Parent and Buyer have, or prior to Closing will have, sufficient funds to enable them to pay the consideration required to be paid by Buyer pursuant to Article II and to perform their obligations hereunder. Section 4.5 No Other Broker. Other than DeGuardiola Advisors, Inc., the fees and expenses of which will be paid by Buyer and/or Buyer Parent, no broker, finder or similar intermediary has acted for or on behalf of or is entitled to any broker's, finder's or similar fee or other commission from Buyer or Buyer Parent or any of their Affiliates in connection with this Agreement or the transactions contemplated hereby. Section 4.6 Legal Proceedings. There are no legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature that are pending or, to Buyer's or Buyer Parent's knowledge, have been threatened in writing against Buyer or Buyer Parent or any of their Affiliates or their respective properties which (a) individually or in the aggregate, are reasonably expected to have a Buyer Material Adverse Effect or (b) challenge the validity of the transactions contemplated by this Agreement, and there is no injunction, order, judgment, decree, or regulatory restriction imposed upon Buyer or Buyer Parent or any of their Affiliates or their properties or assets which, individually or in the aggregate, is reasonably expected to have a Buyer Material Adverse Effect. Section 4.7 Capitalization. The authorized number of shares of Parent Stock as of December 31, 2000 was 1,049,999,999 Ordinary Shares. At December 31, 2000, the issued number of shares of Parent Stock was 771,037,502 Ordinary Shares. All the issued Ordinary Shares have been duly authorized and validly issued and are fully paid and non-assessable. When Ordinary Shares are issued pursuant to the terms of this Agreement, they will be (a) duly authorized and validly and newly issued, (b) non-assessable, (c) freely tradeable on the LSE, (d) free of any pre-emptive rights and (d) free of any transfer restrictions imposed by Buyer Parent or under Applicable Law (other than restrictions set forth in Section 2.11 hereof and, with respect to a Common Seller for so long as such Common Seller is an employee of Buyer Parent or one of its Affiliates, restrictions generally applicable to employees of Buyer Parent or its Affiliates). The only authorized capital stock of Buyer is 1,000 40 46 shares of common stock, par value $.01 per share, of which 160 shares are issued and outstanding and owned by Buyer Parent. Section 4.8 Buyer Parent Reports. Since January 1, 2000, Buyer Parent has filed all material registrations, reports, statements, notices and other material filings required to be filed with the SEC, the LSE, the Investment Management Regulatory Organisation Limited ("IMRO"), and any other Governmental Authority by Buyer Parent, to the extent applicable, including all required amendments or supplements to any of the above (the foregoing, excluding reports on Form 6-K filed with the SEC that relate to transactions by directors or officers of Buyer Parent or its affiliates in shares of Buyer Parent, the "Buyer Parent Reports"). The Buyer Parent Reports complied in all material respects, where applicable, with the requirements of the Securities Act, the Exchange Act, the Advisers Acts, the Investment Company Act, the Companies Act and the rules and regulations of IMRO and any other Governmental Authority. As of their respective dates, each of the Buyer Parent Reports constituting prospectuses, listing particulars (to the extent their contents relate to the Buyer Parent and its Affiliates), statements of additional information, Part II of Form ADVs, annual reports on Form 20-F and proxy statements did not contain any untrue statement of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Section 4.9 Taxes. There are no U.K. stamp or transfer Taxes due in respect of the issuance of any shares of Parent Stock under this Agreement. ARTICLE V COVENANTS Section 5.1 Conduct of Business by the Company. During the period from the date of this Agreement and continuing through the Effective Time, except as expressly contemplated or permitted by this Agreement or with the prior written consent of Buyer Parent, the Company shall (a) carry on its business in the ordinary course consistent with past practices; (b) use all reasonable efforts to preserve its present business organization, relationships and Clients; (c) use all reasonable efforts to keep available the present services of its employees; (d) use all reasonable efforts to bill and collect investment advisory fees consistent with past practices; and (e) use all reasonable efforts to preserve its rights, franchises, goodwill and relations with its Clients and others with whom it conducts Business. Without limiting the generality of the foregoing, except as expressly permitted by this Agreement, as set forth in Section 5.1 of the Company Disclosure Memorandum, or consented to in writing by Buyer Parent, the Company shall not: 41 47 (i) issue any securities or borrow money or acquire any of its shares of Capital Stock; (ii) pay (or commit to pay) any bonus to any director, partner, officer, other employee or sales representative, except such bonuses calculated consistent with the past practices of the Company; (iii) create, renew, amend, terminate or cancel, or take any other action that may result in the creation, renewal, amendment, termination or cancellation of, any Contract except in the ordinary course of business; (iv) take any action impairing its rights in any Contract or its assets other than in the ordinary course of business; (v) purchase or lease any assets from, or sell or lease any assets to, any of its Affiliates; (vi) adopt, amend, renew or terminate any Plan or any other employee program, agreement, arrangement or policy between the Company and one or more of its employees, other than in the ordinary course of business; (vii) take or fail to take any action which action or omission constitutes a breach or default under any material Contract or material license to which the Company is a party or by which it or any of its properties is bound the effect of which could reasonably be expected to cause a Company Material Adverse Effect; (viii) amend its Organizational Documents; (ix) terminate senior employees of the Company without having consulted with Buyer Parent; (x) enter into any new line of business unrelated to the Business as currently conducted; (xi) acquire or sell in any manner, including by way of merger, consolidation or purchase or sale of an equity interest or assets, any business or any corporation, partnership, association or other business organization or division thereof, or (xii) agree to do any of the foregoing. 42 48 Section 5.2 No Solicitation, etc. Prior to the Closing, neither the Company, any Common Seller nor the Preferred Seller shall (i) solicit or encourage any inquiries or proposals for, or enter into any discussions with respect to, the acquisition of any of the Capital Stock of the Company or the Business or all, or substantially all, of the assets of the Company or (ii) furnish or cause to be furnished any non-public information concerning the Business and operations of the Company to any Person (other than Buyer and its Affiliates and their agents or representatives or the Sellers and their agents or representatives) other than in the ordinary course of business or pursuant to Applicable Law. Except as otherwise permitted by this Agreement, prior to the Closing, the Company shall not issue, sell, transfer or otherwise dispose of, grant any option to any Person with respect to, create any Encumbrance upon, or transfer any shares of Capital Stock of the Company and each Common Seller and the Preferred Seller shall not sell, transfer or otherwise dispose of, grant any option to any Person with respect to, create any Encumbrance upon, or transfer, such shares of Capital Stock of the Company. Section 5.3 Consents. (a) Registered Funds. The Company, as promptly as practicable, shall (i) use its reasonable best efforts to cause the Investment Company Board of each Registered Fund to call a special meeting of the shareholders of such Registered Fund to be held as promptly as reasonably practicable for the purpose of obtaining the approval of such shareholders of a new Investment Management Agreement containing terms (other than fee rates) that are not materially less favorable to the Company than the terms contained in the Investment Management Agreement with such Registered Fund existing on the date hereof, (ii) use, and use its reasonable best efforts to cause each Registered Fund to use, its reasonable best efforts to obtain, or cause to be obtained, the approval of the Investment Company Boards and the shareholders of such Registered Fund, pursuant to the provisions of Section 15 of the Investment Company Act applicable thereto, of such Investment Management Agreement for such Registered Fund with the Company, (iii) use its reasonable best efforts to cause each Registered Fund to prepare, file with and cause to be cleared by the SEC and all other Governmental Authorities having jurisdiction there over, as promptly as practicable after the date hereof, all proxy solicitation materials required to be distributed to shareholders of each such Registered Fund with respect to the actions recommended for shareholder approval by the Investment Company Boards, (iv) use its reasonable best efforts to cause each Registered Fund to mail such proxy solicitation materials to such shareholders promptly after clearance by the SEC and cause to be submitted to a meeting of shareholders of such Registered Fund as soon as practicable after such mailing the proposals described in clause (ii) above, and (v) use its reasonable best efforts to cause the Investment Company Board of each 43 49 Registered Fund to approve, pursuant to and in conformity with Section 15(a)(4) of the Investment Company Act and SEC Rule 15a-4 thereunder, of an interim Investment Management Agreement for such Registered Fund with the Company (A) providing for the Company to continue as the adviser of such Registered Fund with the same advisory fees as are in effect under the existing Investment Management Agreement for such Registered Fund with the Company on the date hereof, (B) becoming effective at the time of the Closing for any Registered Fund whose shareholders have not, prior to the Closing, approved a new Investment Management Agreement with the Company, and (C) satisfying all requirements of SEC Rule 15a-4(b)(2)(iv)-(vi) (each an "Interim Advisory Contract"). (b) Other Client Consents. If Consent to the assignment or deemed assignment of an Investment Management Agreement with Clients of the Company (other than Clients that are Registered Funds) as a result of the transactions contemplated by this Agreement is required by Applicable Law or by such Client's Investment Management Agreement, as soon as reasonably practicable following the date hereof, the Company shall send a notice in form and substance acceptable to Buyer (the "Notice") informing such Clients of the transactions contemplated by this Agreement, requesting written Consent to the assignment of such Client's Investment Management Agreement and informing such Client (i) of the intention to complete the transactions contemplated by this Agreement, which will result in a deemed assignment of such Investment Management Agreement; (ii) of the intention of the Surviving Corporation to cause a subsidiary of the Surviving Corporation which is a registered investment adviser to continue to provide the advisory services pursuant to the existing Investment Management Agreement with such Client after the Effective Time; and (iii) that the Consent of such Client will be deemed to have been granted if such Client continues to accept such advisory services through April 30, 2001 without termination of such Client's Investment Management Agreement with the Company or without advising the Company, either orally or in writing, of its intention to terminate such Investment Management Agreement. Buyer Parent and Buyer each agrees that Consent for any Investment Management Agreement with a Client (other than Clients that are Registered Funds) to the assignment or deemed assignment resulting from the transactions contemplated by this Agreement shall be deemed given for all purposes hereunder (A) if no Consent is required under Applicable Law or the respective Investment Management Agreement (provided that there is no notification or communication, either written or oral, that would reasonably be construed as equivalent to a statement that such Client will terminate or intends to terminate its Investment Management Agreement with the Company within sixty (60) days following the Effective Time), (B) if Consent is required under Applicable Law or the respective Investment Management Agreement, upon receipt of the written Consent requested in the Notice (provided that, after the date of receipt of such written Consent, there is no notification or communication, either written or 44 50 oral, that would reasonably be construed as equivalent to a statement that such Client will terminate or intends to terminate its Investment Management Agreement with the Company within sixty (60) days following the Effective Time) or (C) if such Consent is required under Applicable Law or the respective Investment Management Agreement, and if the written Consent requested in any Notice is not received on or prior to April 30, 2001, to the extent such Client continues to accept the investment advisory services provided by the Company under such Investment Management Agreement for the period ending on April 30, 2001, unless (1) such Client has at any time on or prior to April 30, 2001 terminated, or advised the Company, either orally or in writing, of its intention to terminate such Investment Management Agreement or (2) there exists any notice or communication, either written or oral, that would reasonably be construed as equivalent to a statement that such Client will terminate or intends to terminate its Investment Management Agreement with the Company within sixty (60) days following the Effective Time. The Buyers shall be provided a reasonable opportunity to review all such Consent materials to be used by the Company prior to distribution. The Company shall promptly upon their receipt make available to the Buyers copies of any and all substantive correspondence between it and Clients or representatives or counsel of such Clients relating to the Consent solicitation provided for in this Section 5.3 (a) and (b). Prior to the Closing Date, no Buyer shall contact, in writing or otherwise, any Client or any other Person who acts as an adviser to or "gatekeeper" for any Client with respect to this Agreement or the transactions contemplated hereby or the Consent without the prior approval of the Seller Representative, which approval shall not be unreasonably withheld or delayed. (c) Client Procedures. In connection with obtaining the Client Consents required by subsections (a) and (b), the Company shall take reasonable steps to keep the Buyers informed of the status of obtaining such Client Consents and, to the extent applicable, deliver to the Buyers prior to the Closing copies of all such executed Client Consents and make available for inspection the originals of such Consents prior to the Closing. (d) The Registered Funds' Proxy Statements. In connection with the preparation and filing of the proxy solicitation materials referred to in the subsection (a) above, the Company and the Buyers will cooperate with each other and with the Investment Company Board of each Registered Fund, including providing such information as may be reasonably requested for inclusion in such proxy statements. Each of the Company, the Buyer and Buyer Parent agrees that none of such information provided by it for inclusion in such proxy solicitation materials will contain any untrue statement of a material fact, or omit to state any material fact required to make the statements therein, in light of the circumstances in which they were made, not misleading. 45 51 (e) The Registered Funds' Registration Statements. Prior to the earlier of the Closing Date or the termination of this Agreement, the Company and the Buyers will cooperate with each other and each will endeavor in good faith to cause each Registered Fund to file supplements or post-effective amendments to that Registered Fund's registration statement on Form N-1A, which supplements or amendments shall reflect changes as necessary in that Registered Fund's affairs as a consequence of the transactions contemplated by this Agreement, and shall cooperate with one another in causing each Registered Fund to make any other filing necessary under Applicable Law to satisfy disclosure requirements to enable the public distribution of the shares of beneficial interest of that Registered Fund to continue. (f) Continued Qualification. Prior to the earlier of the Closing Date or the termination of this Agreement, the Company shall use commercially reasonable efforts to ensure that no Registered Fund takes any action that (a) would prevent any Registered Fund from qualifying as a "regulated investment company" under Section 851 of the Code, or (b) would be inconsistent with each Registered Fund's prospectuses and other offering, advertising and marketing materials, as amended or supplemented. Section 5.4 Investment Company Matters. (a) Each of the Common Sellers and Buyers agree that neither it nor any of its Affiliates has any express or implied understanding or agreement that would impose an "unfair burden" on any Registered Fund or would in any way interfere with any Registered Fund's reliance on Section 15(f) of the Investment Company Act as a result of the transactions contemplated by this Agreement. The Common Sellers and Buyers agree to comply and to use their respective commercially reasonable efforts to cause the respective boards of directors of the Investment Company to comply with the provisions of Section 15(f) of the 1940 Act prior to the Effective Time. Following the Effective Time, the Buyers shall not fail to take, and shall use reasonable best efforts to cause each Affiliate of the Buyer Parent to not fail to take, any action if the failure to take such action would have the effect, directly or indirectly, of causing the requirements of any of the provisions of Section 15(f) of the Investment Company Act not to be met in respect of this Agreement and the transactions contemplated hereby. In that regard, each of Buyer Parent and the Buyer shall conduct its business and shall, subject to the applicable fiduciary duties to the Registered Funds, use its reasonable best efforts to cause each of its Affiliates to conduct its business so as to assure that, insofar as within the control of Buyer Parent, the Buyer or their respective Affiliates: (i) for a period of three years after the Closing, at least 75% of the members of the Investment Company Boards of each Registered Fund or their 46 52 successors are not (A) "interested persons" of the investment adviser of such Registered Fund after the Closing, or (B) "interested persons" of the present or successor investment manager of such Registered Fund; and (ii) for a period of two years after the Closing, there shall not be imposed on any Registered Fund an "unfair burden" as a result of the transactions contemplated under this Agreement, or any express or implied terms, conditions or understandings applicable thereto. (b) For a period of three years from the Closing, neither Buyer Parent nor Buyer shall, and Buyer Parent and Buyer shall use reasonable best efforts to cause their respective Affiliates not to, voluntarily engage in any transaction that would constitute an "assignment" of any Investment Management Agreement with any Registered Fund currently managed by the Company to which Buyer Parent, the Buyer or any such Affiliate is a party, without first obtaining a covenant in all material respects the same as that contained in Section 5.4(a). (c) The terms used in quotations in this Section 5.4 shall have the meanings set forth in Sections 2(a)(4), 2(a)(19) and 15(f) of the Investment Company Act. Section 5.5 Insurance. During the period from the date hereof to the Effective Time, the Company will maintain in effect until superseded by policies of Buyer or its Affiliates all casualty and public liability policies maintained by the Company on the date hereof relating to its Business, or will procure comparable replacement policies and maintain such replacement policies in effect until such time. Section 5.6 Further Assurances. Each party to this Agreement shall execute such documents and other papers and perform such further acts as may be reasonably required to carry out the provisions hereof and the transactions contemplated hereby. For a reasonable period of time after the Closing Date upon the reasonable request of any party (or parties), the other parties shall promptly execute and deliver such further instruments of assignment, transfer, conveyance, endorsement, direction or authorization and other documents as may be requested to effectuate the purposes of this Agreement and the transactions, plans and arrangements contemplated hereby. Section 5.7 Efforts of Parties to Close. During the period from the date of this Agreement through the Closing Date each party hereto shall use all reasonable efforts to fulfill or obtain the fulfillment of the conditions precedent to the 47 53 consummation of the transactions contemplated hereby, including the execution and delivery of any documents, certificates, instruments or other papers that are reasonably required for the consummation of the transactions contemplated hereby. During the period from the date of this Agreement and continuing through the Closing, except as required by Applicable Law or with the prior written Consent of the other parties to this Agreement, no party to this Agreement shall take any action which, or fail to take any action the failure of which to be taken, would, or could reasonably be expected to, (a) result in any of the representations and warranties set forth in this Agreement on the part of the party taking or failing to take such action being or becoming untrue in any respect that would cause Section 6.1(a) or Section 6.2(a) not to be satisfied; (b) result in any conditions to the Closing set forth in Article VI not being satisfied; (c) result in a material violation of any provision of this Agreement; or (d) adversely affect or materially delay the receipt of any of the requisite regulatory approvals. Buyer Parent shall cause Buyer to take all actions necessary to perform and comply with all agreements, covenants and obligations of Buyer hereunder. Section 5.8 Confidentiality and Announcements. (a) Buyer and Buyer Parent agree to be bound by and comply with the provisions set forth in the Confidentiality Agreement, the provisions of which are hereby incorporated herein by reference. (b) Neither the Company, the Sellers, Buyer nor Buyer Parent shall, and each of the foregoing shall cause each of its Affiliates, employees, directors, partners and agents, including accountants, lenders, counsel and investment bankers not to, disclose to any Person (other than its Affiliates, employees, partners and agents) any of the contents hereof other than as required by law upon prior notice to the other parties. (c) Subject to Section 5.9, the parties to this Agreement shall consult each other as to the form and substance of any public disclosures and shall use all reasonable efforts to agree with each other as to the form and substance of any press release related to this Agreement or the transactions contemplated hereby. Section 5.9 Access, Certain Communications. Between the date of this Agreement and the Closing Date, subject to any Applicable Laws relating to the exchange of information, the Company shall afford to Buyer and Buyer Parent and their authorized agents and representatives reasonable access, upon reasonable notice and during normal business hours, to all contracts, documents and information of or relating to the assets, liabilities, business, operations, personnel and other aspects of 48 54 the Business; provided, however, that any such investigation shall be conducted in a manner which does not unreasonably interfere with the Company's normal operations and employee relations. Section 5.10 Regulatory Matters; Third Party Consents. (a) The parties to this Agreement shall cooperate with each other and use all reasonable efforts promptly to prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, and to obtain as promptly as practicable all permits, Consents, approvals, waivers and authorizations of all third parties and Governmental Authorities which are necessary or advisable to consummate the transactions contemplated by this Agreement (it being understood that the Company and the Sellers shall be responsible only for using all reasonable efforts to obtain all such approvals, waivers and Consents from such parties with whom the Company is in contractual privity (including all Clients) and that such efforts shall not require action that in the Company's judgment could have an adverse impact on client relationships. If any required Consent of or waiver by any third party (excluding any Governmental Authority) is not obtained prior to the Closing, the parties hereto, each without cost, expense or liability to the other (except as provided in Article VII hereof), shall cooperate in good faith to seek, if possible, an alternative arrangement to achieve the economic results intended. The parties to this Agreement will have the right to review in advance, and will consult with the other on, in each case subject to Applicable Laws relating to the exchange of information, all of the information relating to Buyer, Buyer Parent, the Company or the Sellers, as the case may be, which appear in any filing made with, or written materials submitted to, any third party or any Governmental Authority in connection with the transactions contemplated by this Agreement, provided, however, that nothing contained herein shall be deemed to provide any party to this Agreement with a right to review any information provided to any Governmental Authority on a confidential basis in connection with the transactions contemplated hereby. The parties to this Agreement agree that they will consult with each other with respect to the obtaining of all permits, Consents, approvals and authorizations of all third parties and Governmental Authority necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the others apprised of the status of matters relating to completion of the transactions contemplated herein. The party responsible for a filing as set forth above shall promptly deliver or make available to the other parties hereto evidence of the filing of all applications, filings, registrations and notifications relating thereto (except for any confidential portions thereof), and any supplement, amendment or item of additional information in connection therewith (except for any confidential portions thereof). The party responsible for a filing shall also promptly deliver or make available to the other 49 55 parties hereto a copy of each material notice, order, opinion and other item of correspondence received by such filing party from any Governmental Authority in respect of any such application (except for any confidential portions thereof). In exercising the foregoing rights and obligations, Buyer, Buyer Parent, the Company and the Sellers shall each act reasonably and as promptly as practicable. (b) The parties to this Agreement shall promptly advise each other upon receiving any communication from any Governmental Authority whose Consent or approval is required for consummation of the transactions contemplated by this Agreement which causes such party to believe that there is a reasonable likelihood that any requisite regulatory approval will not be obtained or that the receipt of any such approval will be materially delayed. Section 5.11 Expenses. Except as otherwise expressly provided herein, Buyer and Buyer Parent on the one hand, and the Sellers and the Company on the other hand, shall each bear their respective direct and indirect expenses incurred in connection with the negotiation and preparation of this Agreement and the consummation of the transactions contemplated hereby, including all direct and indirect expenses incurred in connection with the Consents required to be obtained pursuant to Section 5.3. Section 5.12 Non-Foreign Person Affidavit. Each of the Sellers shall, on or prior to the Closing Date, furnish to the Buyer a non-foreign person affidavit that complies with the requirements of Section 1445 of the Code; provided, however, that notwithstanding anything to the contrary contained in this Agreement, the failure of any or all of the Sellers to provide such affidavit shall not release Buyers from their obligation to consummate the transactions contemplated hereby. Section 5.13 Releases. (a) If the transactions contemplated by this Agreement shall be consummated, effective at the Effective Time, each Common Seller hereby agrees to the termination of Section 14 of the Prior Purchase Agreement and the Shareholders Agreement and hereby releases and discharges the Company, Buyer and Buyer Parent, the Preferred Seller and their respective Affiliates and their respective past, present and future officers, directors, agents and employees, of, from, against and in respect of any action, cause of action, damage, claim, or liability based upon, arising out of, or relating to the ownership by such Common Seller of shares of the Common Stock of the Company (including, without limitation, any claim for payment of any dividends accrued and unpaid, whether or not declared, or declared but unpaid) at any time or for any period ending on, prior to or after the Effective Time, other than 50 56 any claim based upon rights of such Common Seller under this Agreement (including the right to receive the merger consideration payable to such Common Seller as provided in Article II hereof). (b) If the transaction contemplated by this Agreement shall be consummated, effective at the Effective Time, the Preferred Seller hereby agrees to the termination of Section 14 of the Prior Purchase Agreement and hereby releases and discharges the Company, Buyer and Buyer Parent, the Common Sellers and their respective Affiliates and their respective past, present and future officers, directors, agents and employees, of, from, against and in respect of any action, cause of action, damage, claim or liability based upon or arising out of, or relating to, the ownership by the Preferred Seller of shares of the Capital Stock of the Company (including, without limitation, any claim for payment of any accrued and unpaid dividends, whether or not declared, in respect of the Preferred Stock) and any claim for payment of any amounts in respect of the Preferred Stock, whether characterized as a payment in redemption of the Preferred Stock or otherwise and whether based on the terms of the designation of the Preferred Stock contained in the Amended Articles of Incorporation of the Company or otherwise) at any time or for any period ending on, prior to or after the Effective Time, other than any other claim based upon rights of the Preferred Seller under this Agreement (including the right to receive the Merger Consideration payable to the Preferred Stock as provided in Article II hereof). Section 5.14 Retention Bonus Plan. Prior to the Effective Time, the Surviving Corporation (or its successor or assignee) shall have adopted and approved a Retention Bonus Plan in substantially the form attached as Annex B (the "Retention Plan) and following its adoption such Retention Plan shall not be rescinded or modified without the written consent of the Seller Representative. Section 5.15 Option Holders. Prior to the Closing Date, the Company shall accelerate the vesting of any unvested portion of the outstanding options to acquire Common Stock owned by each of Mark W. Lattis and Matthew G. Bevin on the date hereof (each an "Option"), and each of Mark W. Lattis and Matthew G. Bevin shall exercise in full their respective Options. Mark W. Lattis further agrees that at such time as he exercises any such Option he shall become a Common Seller under this Agreement and shall have all of the rights, duties and obligations thereof. Section 5.16 Termination of Employee Benefit Plans. The Common Sellers covenant and agree that, if requested in writing by Buyer Parent prior to the Closing Date, the Common Sellers will use best efforts in accordance with Applicable Law to cause the Company to terminate, effective as of immediately prior to the Closing Date, any Plan including, but not limited to, providing any required notices, adopting 51 57 any required amendments or resolutions effective before the Closing Date, and fulfilling all of their obligations to contribute to and to administer such Plans in accordance with their terms. Section 5.17 Shareholder Approval of Certain Matters. Prior to the Closing Date, the Company shall take all actions to obtain, and shall obtain, the requisite approval of the Sellers, as described in Section 280G(b)(5) of the Code and Regulations Section 1.280G-1 thereunder, with respect to payments which may be made to any person who, with respect to the Company, is a "disqualified individual" (as such term is defined for purposes of Section 280G of the Code) if such payment could reasonably be expected to result in the imposition of any excise tax imposed under Section 4999 of the Code. The Company shall provide to Buyer Parent at the Closing evidence of such approval. Section 5.18 Seller Representative Approval. Each of Buyer Parent and the Seller Representative agree that, for the period beginning on the day following the last day of the calendar month ending immediately prior to the Closing Date and ending on the last day of the third Yearly Period, no employee of the Company shall be transferred to, or reassigned to perform duties for, Buyer Parent or any of its Affiliates (other than the Company) without the prior written consent of the Seller Representative. Section 5.19 Payment of Preferred Dividend Amount. (a) The Common Sellers shall cause the Company to, and the Company shall, prepare and deliver a statement to the Preferred Seller setting forth the calculation in reasonable detail of the Preferred Dividend Amount at least 15 days prior to the Closing Date, with such statement being subject to prompt review by Preferred Seller, such review to be consistent with past practice. (b) Prior to the Closing Date, the Common Sellers shall cause the Management Committee of the Company to declare and the Company to pay the Preferred Dividend Amount in full together with any unpaid portion of the dividend payable on the Preferred Stock on February 15, 2001. (c) The Common Sellers shall cause the Company to, and the Company shall, pay the Preferred Dividend Amount to the Preferred Seller at least two (2) Business Days prior to the Closing Date. 52 58 ARTICLE VI CONDITIONS TO CLOSING Section 6.1 Conditions to Buyer's and Buyer Parent's Obligations. The obligations of Buyer and Buyer Parent to effect the Closing and consummate the Merger shall be subject to the following conditions, any of which may be waived in writing by Buyer Parent: (a) The representations and warranties of the Sellers set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date; provided, however, that for purposes of determining the satisfaction of the condition contained in this Section 6.1(a), no effect shall be given to any exception in such representations and warranties relating to knowledge, materiality, or a Company Material Adverse Effect, and such representations and warranties shall be deemed to be true and correct in all material respects only if the failure or failures of such representations and warranties to be so true and correct without regard to knowledge, materiality and Company Material Adverse Effect exceptions do not represent in the aggregate a Company Material Adverse Effect; (b) Each Common Seller and the Preferred Seller shall have performed and complied in all material respects with the agreements, covenants, obligations and conditions required by this Agreement to be performed or complied with by it at or prior to the Closing Date; (c) The Buyer shall have received a certificate, dated as of the Closing Date, signed by the Seller Representative on behalf of the Common Sellers and by a duly authorized officer of the Preferred Seller as to matters contained in paragraphs (a) and (b) of this Section 6.1; (d) The Company shall have received the affirmative written Consents of Clients (other than Clients that are Registered Funds) comprising at least seventy percent (70%) of the Base Revenue Run-Rate. (e) Each of (i) Carl W. Hafele, John W. Ferreby, David B. Hiller, William F. Chandler, Michael C. Heyman, Stephen G. Mullins, Larry J. Walker and Randall T. Zipfel and (ii) any four (4) of the following employees: David B. Chick, Catherine R. Stodghill, Brent A. Bell, Erik N. Evans, Matthew G. Bevin and Mark W. Lattis, shall have entered into Employment Agreements substantially in the form set forth in Annex C hereto, and neither any Person listed in clause (i) in this 53 59 subsection (e) nor any three (3) of the Persons listed in clause (ii) in this subsection (e) shall have terminated his or her employment with the Company under his or her respective Employment Agreement prior to the Effective Time. Section 6.2 Conditions to the Company and the Sellers' Obligations. (i) The obligations of the Sellers with respect to subsections (a), (b), (c) and (d) of this Section 6.2 to effect the Closing and consummate the merger shall be subject to the conditions set forth therein, which may be waived in writing by the Seller Representative and the Preferred Seller, (ii) the obligations of the Common Sellers with respect to subsection (e) of this Section 6.2 to effect the Closing and consummate the merger shall be subject to the condition set forth therein, which may be waived in writing by the Seller Representative and (iii) the obligation of the Preferred Seller with respect to subsection (f) of this Section 6.2 to effect the Closing and consummate the merger shall be subject to the condition set forth therein, which may be waived in writing by the Preferred Seller: (a) the representations and warranties of Buyer and Buyer Parent contained in this Agreement shall be true in all material respects as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date; provided, however, that for purposes of determining the satisfaction of the condition contained in this Section 6.2(a), no effect shall be given to any exception in such representations and warranties relating to knowledge, materiality or a Buyer Material Adverse Effect, and such representations and warranties shall be deemed to be true and accurate in all material respects only if the failure or failures of such representations and warranties to be so true and correct without regard to knowledge, materiality, and Buyer Material Adverse Effect exceptions do not represent in the aggregate a Buyer Material Adverse Effect; (b) Buyer and Buyer Parent shall have performed and complied in all material respects with the agreements, covenants, obligations and conditions required by this Agreement to be performed or complied with by them at or prior to the Closing Date; (c) Buyer shall have delivered to the Seller Representative and the Preferred Seller a certificate, dated as of the Closing Date, signed on behalf of Buyer by one of its executive officers confirming the satisfaction of the conditions contained in paragraphs (a) and (b) of this Section 6.2; (d) Buyer Parent shall have delivered to the Seller Representative and the Preferred Seller a certificate, dated as of the Closing Date, signed on behalf of Buyer 54 60 Parent by one of its executive officers confirming the satisfaction of the conditions contained in paragraphs (a) and (b) of this Section 6.2; (e) The Surviving Corporation (or its successor or assignee) shall have adopted and approved the Retention Plan in substantially the form attached as Annex B and such approval shall not have been rescinded or modified by the Surviving Corporation (or its successor or assignee) prior to the Effective Time; and (f) The Company shall have declared and paid to the Preferred Seller the dividend in an amount equal to the Preferred Dividend Amount (such amount in addition to, and not including, the dividend payable on February 15, 2001). Section 6.3 Mutual Conditions. The obligations of each party to this Agreement to effect the Closing shall be subject to the following conditions, any of which may be waived in writing by the Company, the Seller Representative, the Preferred Seller and Buyer Parent: (a) No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect. No proceeding initiated by any Governmental Authority seeking an injunction shall be pending. No statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any Governmental Authority which prohibits, restricts or makes illegal consummation of the transactions contemplated hereby; and (b) In respect of the notifications of the parties hereto pursuant to the HSR Act, the applicable waiting period and any extensions thereof shall have expired or terminated; and (c) The Closing Revenue Run-Rate shall not be less than 85% of the Base Revenue Run-Rate. ARTICLE VII INDEMNIFICATION Section 7.1 Survival of Representations, Warranties and Covenants. All representations and warranties of the Sellers contained in this Agreement, including the Company Disclosure Memorandum made a part hereof, (other than the representations and warranties contained in Sections 3.3 and 3.17), and all covenants 55 61 or other agreements of the Sellers which are specified to occur on or prior to Closing, shall survive until March 31, 2003. The representations and warranties of each Seller in Section 3.3 made by such Seller in respect of such Seller or Capital Stock owned by such Seller shall survive forever. The representations and warranties of the Common Sellers contained in Section 3.17 shall survive until the expiration of the applicable statutory periods of limitation. Any covenant or other agreement herein of any party any portion of the performance of which may or is specified to occur after the Closing shall survive the Closing hereunder indefinitely or for such lesser period of time as may be specified therein. The representations and warranties of the Buyers contained in this Agreement, and all covenants or other agreements of the Buyers which are specified to occur on or prior to Closing, shall survive until March 31, 2003. Section 7.2 Obligations of the Common Sellers. (a) Subject to the other provisions of this Article VII, from and after the Closing, each Common Seller shall indemnify, defend and hold harmless Buyer and Buyer Parent and their respective employees, officers, partners and Affiliates from and against any and all Losses which any of them may suffer, incur or sustain arising out of, attributable to, or resulting from: (i) any inaccuracy in or breach of any of the representations and warranties of such Common Seller made in this Agreement; or (ii) any breach or nonperformance of any of the covenants or other agreements made and to be performed by the Common Sellers prior to, at or after the Closing, in each case in or pursuant to this Agreement. (b) For purposes of Section 7.2(a)(i), the existence of an inaccuracy or breach of any representation or warranty of any Common Seller made in this Agreement shall be determined without giving effect to any exception in such representation or warranty relating to materiality or a Company Material Adverse Effect. (c) No Common Seller shall be obligated individually to provide indemnification exceeding, in the aggregate, its pro rata share (based on such Common Seller's share of the aggregate Merger Consideration paid to the Common Sellers under Article II) of any Loss indemnifiable under Section 7.2(a), provided that (i) each Common Seller shall be obligated to provide indemnification for one hundred percent (100%) of any Loss to the extent attributable to an inaccuracy in or breach of (A) the representation and warranty contained in Sections 3.3 or 3.4 made 56 62 by such Common Seller in respect of such Common Seller or Common Stock owned by such Common Seller and (B) the covenant contained in Section 5.15 made by such Common Seller in respect of such Common Seller, without regard to the limitations set forth in Section 7.7(a) or Section 7.8(a) and (ii) no other Common Seller or the Preferred Seller shall be obligated to provide any indemnification with respect to such Loss. The Buyers shall seek payment for indemnification under this Article VII for any Loss from the Common Sellers (other than a Loss in respect of an inaccuracy in or breach of the representations and warranties in Sections 3.3 and 3.4 or a breach or nonperformance of the covenant in Section 5.15) on a pro rata basis (based on such Common Seller's share of the aggregate Merger Consideration paid to the Common Sellers under Article II). (d) Notwithstanding any other provision of this Article VII other than Section 7.2(e), each of the Common Sellers agrees to indemnify the Buyer from and against the entirety of any Loss the Buyer may suffer resulting from, arising out of, relating to, in the nature of, or caused by any liability of the Company (x) for any Taxes of the Company with respect to any Tax year or portion thereof ending on or before the Closing Date (or for any Tax to the extent allocable (determined in a manner consistent with Section 8.1(b) of this Agreement) to the portion of such period beginning before and ending on the Closing Date), to the extent such Taxes are not reflected in the reserve for Tax liabilities (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) shown on the face of the Estimated Closing Balance Sheet (rather than in any notes thereto), and (y) for the unpaid Taxes of any Person (other than the Company) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. (e) Notwithstanding anything to the contrary in this Agreement, in no event shall any Common Seller be required to indemnify the Buyers in respect of any Tax liability of the Company arising from the failure of the transactions contemplated by this Agreement to qualify as a reorganization pursuant to Section 368(a) of the Code. (f) Notwithstanding anything to the contrary in this Agreement, the Buyers shall not be entitled to recover for the same liability under Section 7.2(a) and Section 7.2(d). Section 7.3 Obligations of the Preferred Seller. (a) Subject to the other provisions of this Article VII, from and after the Closing, the Preferred Seller shall indemnify, defend and hold harmless Buyer and 57 63 Buyer Parent and their respective employees, officers, partners and Affiliates from and against any and all Losses which any of them may suffer, incur or sustain arising out of, attributable to, or resulting from: (i) any inaccuracy in or breach of any of the representations and warranties of the Preferred Seller made in this Agreement; or (ii) any breach or nonperformance of any of the covenants or other agreements made and to be performed by the Preferred Seller under Sections 5.2, 5.6, 5.7, 5.8(b) and (c), 5.10, 5.11, 5.12, 5.13 or 5.17 prior to, at or after the Closing, in each case in or pursuant to this Agreement. (b) For purposes of Section 7.3(a)(i), the existence of an inaccuracy or breach of any representation or warranty of the Preferred Seller made in this Agreement shall be determined without giving effect to any exception in such representation or warranty relating to materiality or a Company Material Adverse Effect. Section 7.4 Obligations of Buyer and Buyer Parent. (a) Subject to the other provisions of this Article VII, from and after the Closing, each of Buyer and Buyer Parent hereby agree, jointly and severally, to indemnify, defend and hold harmless the Sellers and their respective agents or representatives from and against any and all Losses which any of them may suffer, incur, or sustain to the extent arising out of, attributable to, or resulting from: (i) any inaccuracy in or breach of any of the representations and warranties of Buyer or Buyer Parent made in this Agreement; or (ii) any breach or nonperformance of any of the covenants or other agreements made and to be performed by Buyer or Buyer Parent in or pursuant to this Agreement. (b) For purposes of Section 7.4(a)(i), the existence of an inaccuracy or breach of any representation or warranty of Buyer Parent or Buyer made in this Agreement shall be determined without giving effect to any exception in such representation or warranty relating to materiality or a Buyer Material Adverse Effect. (c) Notwithstanding anything to the contrary in this Agreement, in no event shall the Buyers be required to indemnify any of the Sellers in respect of any Tax liability of such Sellers arising from the failure of the transactions contemplated 58 64 by this Agreement to qualify as a reorganization pursuant to Section 368(a) of the Code. Section 7.5 Procedure. (a) Notice of Claims. Any Indemnified Party seeking indemnification for any Loss or potential Loss shall give written notice to the applicable Indemnifying Party from whom indemnification hereunder is being sought, and if the Indemnified Party is a Common Seller or the Preferred Seller, then to the other Common Sellers and the Preferred Seller, specifying in detail (i) the representation and warranty or covenant or other agreement that is alleged to have been inaccurate or to have been breached, (ii) the basis for such allegation, including the provision of supporting documentation and (iii) if known, the aggregate amount of the Losses for which a claim is being made under this Article VII or, to the extent that such Losses are not known or have not been incurred at the time such claim is made, an estimate, to be prepared in good faith and accompanied by supporting documentation, of the aggregate potential amount of such Losses. Written notice to such Indemnifying Party of the existence of a Claim shall be given by the Indemnified Party promptly after the Indemnified Party first receives notice of the potential claim; provided, however, that the Indemnified Party shall not be foreclosed from seeking indemnification pursuant to this Article VII by any failure to provide such prompt notice of the existence of a Claim to the applicable Indemnifying Party except and only to the extent that such Indemnifying Party actually incurs an incremental out-of-pocket expense or otherwise has been materially damaged or prejudiced as a result of such delay. (b) Defense. Except as otherwise provided herein, in the case of any claim asserted by a Person that is not a party to this Agreement (a "Third Party Claim"), an Indemnifying Party may elect to compromise or defend, at such Indemnifying Party's own expense and by such Indemnifying Party's own counsel (which counsel shall be reasonably satisfactory to the Indemnified Party), any Third Party Claim. If an Indemnifying Party elects to compromise or defend such Third Party Claim, it shall promptly notify the Indemnified Party and any other Indemnifying Parties of its intent to do so, and the Indemnified Party shall cooperate, at the expense of the applicable Indemnifying Party or Indemnifying Parties, in the compromise of, or defense against, such Third Party Claim. For so long as no Indemnifying Party elects to compromise or defend against the Third Party Claim, fails to notify the Indemnified Party of its election to do so, or otherwise abandons the defense of such Third Party Claim, (i) the Indemnified Party may pay (without prejudice of any of its rights as against any applicable Indemnifying Party), compromise or defend such Third Party Claim (until such defense is assumed by an 59 65 applicable Indemnifying Party) and (ii) the costs and expenses of the Indemnified Party incurred in connection therewith shall be indemnifiable by the applicable Indemnifying Party or Indemnifying Parties pursuant to the terms of this Agreement. Notwithstanding anything to the contrary contained herein, in connection with any Third Party Claim in which the Indemnified Party shall reasonably conclude, based upon the written advice of its counsel, that (iii) there is a conflict of interest between an applicable Indemnifying Party and the Indemnified Party in the conduct of the defense of such Third Party Claim or (iv) there are specific defenses available to the Indemnified Party which are different from or additional to those available to an applicable Indemnifying Party and which could be materially adverse to such Indemnifying Party, then the Indemnified Party shall have the right to assume and direct the defense of such Third Party Claim. In such an event, the applicable Indemnifying Party or Indemnifying Parties shall pay the reasonable fees and disbursements of their own counsel and one counsel to all the Indemnified Parties. Notwithstanding the foregoing, neither any Indemnifying Party nor the applicable Indemnified Party may settle or compromise any claim over the objection of any other Indemnifying Party that has any liability with respect to such claim or any other Indemnified Party that is a party to such claim; provided, however, that consent to settlement or compromise shall not be unreasonably withheld by any Person. In any event, except as otherwise provided herein, any applicable Indemnified Party and any Indemnifying Party that has any liability with respect to such claim may each participate, at its own expense, in the defense of such Third Party Claim without, in the case of such Indemnified Party, any right to control such defense. If an Indemnifying Party chooses to defend any claim, the Indemnified Party shall make available to such Indemnifying Party any personnel or any books, records or other documents within its control that are reasonably necessary or appropriate for such defense, subject to the receipt of appropriate confidentiality agreements. (c) Settlement. If a settlement offer solely for money damages is made by a third party claimant, and an applicable Indemnifying Party notifies the applicable Indemnified Party in writing of such Indemnifying Party's willingness to accept the settlement offer and pay the amount called for by such offer, and the Indemnified Party declines to accept such offer, the Indemnified Party may continue to contest such claim, free of any participation by the Indemnifying Party, and the amount of any ultimate liability with respect to such Indemnifiable Claim that the applicable Indemnifying Party or Indemnifying Parties has an obligation to pay hereunder shall be limited to the lesser of (i) the amount of the settlement offer that the Indemnified Party declined to accept plus the costs and expenses of the Indemnified Party prior to the date the Indemnifying Party notifies the Indemnified Party of the Indemnifying Party's willingness to settle or compromise such Third Party Claim and (ii) the aggregate Losses of the Indemnified Party with respect to such claim. 60 66 Section 7.6 Survival of Indemnity. Notwithstanding anything to the contrary in this Article VII, no Indemnified Party shall have any right to indemnification with respect to any matter as to which formal notice satisfying the requirements of Section 7.5(a) shall not have been provided by the Indemnified Party to the applicable Indemnifying Party prior to the last day of the period specified in Section 7.1 for the survival of the representation, warranty, covenant or agreement the inaccuracy or breach or nonperformance of which is the basis for the Indemnifiable Claim. Any matter as to which a claim has been asserted by formal notice satisfying the requirements of Section 7.5(a) and within the time limitation applicable by reason of the immediately preceding sentence that is pending or unresolved at the end of any applicable limitation period under this Article VII or the statute of limitations applicable to such claim shall continue to be covered by this Article VII notwithstanding any applicable statute of limitations (which the parties hereby waive solely with respect to such circumstances) or the expiration date described in the immediately preceding sentence of this Section 7.6 until such matter is finally terminated or otherwise resolved by the parties under this Agreement or by a court of competent jurisdiction and any amounts payable hereunder are finally determined and paid. Section 7.7 Minimum Losses. (a) Except as provided in Section 7.2(d) and the proviso to Section 7.2(c), no Indemnified Party under Section 7.2 shall have any right to indemnification under this Article VII until aggregate Losses incurred by the Indemnified Parties under Section 7.2 exceed $2,500,000 after which time only the Losses in excess of such amount shall be recoverable in accordance with the terms hereof. (b) No Indemnified Party under Section 7.4 shall have any right to indemnification under this Article VII until aggregate Losses incurred by the Indemnified Parties under Section 7.4 exceed $2,500,000 after which time only the Losses in excess of such amount shall be recoverable in accordance with the terms hereof. Section 7.8 Maximum Indemnification. (a) Except as provided in the proviso to Section 7.2(c), in no event shall a Common Seller be obligated to provide indemnification exceeding, in the aggregate, more than 50% of the amount of the Merger Consideration (valued as of the time of receipt by such Common Seller) received by such Common Seller hereunder. 61 67 (b) In no event shall the Buyers be obligated to provide indemnification following the Closing exceeding, in the aggregate, ten percent (10%) of the Merger Consideration (valued as of the time of payment). Section 7.9 Subrogation. The rights of any Indemnifying Party shall be subrogated to any right of action which the Indemnified Party may have against any other person with respect to any matter giving rise to a claim for indemnification hereunder. Section 7.10 Adjustments to Indemnification Obligations. The amount which any Indemnifying Party is or may be required to pay any Indemnified Party pursuant to Section 7.2, 7.3 or 7.4 hereof shall be reduced (including without limitation, retroactively) by any insurance proceeds or other amounts actually recovered by or on behalf of such Indemnified Party in reduction of the related Loss. If an Indemnified Party shall have received the payment required by this Agreement from an Indemnifying Party in respect of a Loss and shall subsequently actually receive insurance proceeds or other amounts in respect of such Loss, then such Indemnified Party shall pay to such Indemnifying Party a sum equal to the amount of such insurance proceeds or other amounts actually received (net of any expenses, other than the cost of carrying such insurance, in obtaining the same). Section 7.11 Exclusive Remedy. To the extent not prohibited by law, this Article VII shall provide the sole and exclusive remedy for any and all Losses in the event the Closing occurs, including, without limitation, those asserted by any party, federal, state, local or foreign governmental entity, third party, or former or present employee, sustained or incurred by the parties hereto and relating to this Agreement; provided that this Article VII shall not restrict the ability of any party to seek specific performance of this Agreement or any provision hereof or any other form of equitable relief against any breach by any other party hereto to the extent provided by Section 10.9. Section 7.12 Right of Off-Set/Set-Off. Buyers shall have the right to off-set or set-off any indemnification payment from a Common Seller or the Preferred Seller to which either of them is entitled pursuant to this Article VII against any other payment to be made by Buyer or Buyer Parent any of their Affiliates to such Common Seller or the Preferred Seller, whether pursuant to this Agreement or, in the case of the Common Sellers, otherwise, provided, however, that (a) such right of off-set or set-off shall only be exercisable by Buyer Parent, Buyer or any of their Affiliates only to the extent that either (i) the Preferred Seller, the Seller Representative, Buyer Parent and Buyer have agreed to such off-set or set-off, or (ii) if no such agreement has been made, to the extent that a court of competent 62 68 jurisdiction has issued a final judgment, from which no appeal can be or is timely taken, as to the liability under this Article VII of the Common Seller or the Preferred Seller against which such off-set or set-off is to be made in respect of the Claim which gave rise to the indemnification payment from such Common Seller or the Preferred Seller and (b) Buyer Parent or such Affiliate shall off-set or set-off such indemnification payment on a pro rata basis as to each Common Seller to the greatest extent practicable. To the extent that Buyer Parent or Buyer is entitled to recover all or a portion of any Loss with respect to any Claim that is finally adjudicated under subsection (ii) of the immediately preceding sentence, Buyer Parent or Buyer shall be entitled to accrued interest from the Common Sellers in respect of such Loss accruing from the date that Buyer Parent or Buyer gave written notice of the claim to which such Loss relates to the Seller Representative at an interest rate equal to LIBOR plus 2%. No exercise by Buyers, or either of them, of such right of off-set or set-off shall constitute a default in the payment of any amount against which such off-set or set-off is made. Section 7.13 Adjustment. Any payment made by a party hereto pursuant to this Article VII shall be deemed an adjustment to the Aggregate Purchase Price for Tax purposes. The Buyers shall not be entitled to indemnification under this Article VII in respect of any Loss for which an adjustment has previously been made pursuant to Article II. Section 7.14 Seller Representative. Except in respect of a claim against a Common Seller for any Loss attributable to an inaccuracy in a breach of the representations and warranties contained in Sections 3.3 and 3.4 made by such Common Seller in respect of such Seller or Capital Stock owned by such Common Seller, but notwithstanding any other provision in this Agreement to the contrary, all rights of the Common Sellers as Indemnifying Parties or as Indemnified Parties under Article VII shall be exercised exclusively by the Seller Representative, and the Buyer and Buyer Parent shall be entitled to deal exclusively with the Seller Representative in respect of all such rights. 63 69 ARTICLE VIII TAX MATTERS Section 8.1 Tax Matters. The following provisions shall govern the allocation of responsibility as between Buyer and Common Sellers for certain tax matters following the Closing Date: (a) Tax Periods Beginning Before the Closing Date. Buyers shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for the Tax liabilities of the Company for all periods ending on or prior to the Closing Date which are filed after the Closing Date and for all periods beginning prior to and ending after the Closing Date, which Tax Returns shall be prepared consistent with past practice. Buyers shall provide copies of each such Tax Return to the Seller Representative for its review no later than sixty (60) days prior to the date on which such Tax Return is required to be filed. If, within 15 days after the provision of any such Tax Return to the Seller Representative, the Seller Representative objects to any item on such Tax Return, the Buyers and the Seller Representative shall negotiate in good faith to resolve such dispute, and, if they are unable to do so, shall submit such dispute to an accounting firm reasonably agreeable to both of them, which accounting firm's resolution shall be binding. The fees and expenses of such accounting firm shall be borne by the Buyers and the Common Sellers in proportion to which the matter in dispute is resolved against each of them. (b) Other Taxes Accruing Before the Closing Date. The Common Sellers shall pay to Buyer within fifteen (15) days after the date on which Taxes are paid with respect to any periods prior to the Closing Date an amount equal to the portion of such Taxes not reflected in the reserve for Tax liabilities (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) shown on the face of the Estimated Closing Balance Sheet (rather than in any notes thereto). For purposes of this Section, in the case of any Taxes that are imposed on a periodic basis and are payable for a Taxable period that begins prior to the Closing Date (but does not end on) the Closing Date, the portion of such Tax which relates to the portion of such Taxable period ending on the Closing Date shall (x) in the case of any Taxes other than Taxes based upon or related to income or receipts, be deemed to be the amount of such Tax for the entire Taxable period multiplied by a fraction the numerator of which is the number of days in the Taxable period ending on the Closing Date and the denominator of which is the number of days in the entire Taxable period, and (y) in the case of any Tax based upon or related to income or receipts be deemed equal to the amount which would be payable if the relevant Taxable period ended on the Closing Date. Any credits relating to a 64 70 Taxable period that begins before and ends after the Closing Date shall be taken into account as though the relevant Taxable period ended on the Closing Date. All determinations necessary to give effect to the foregoing allocations shall be made in a manner consistent with prior practice of the Company. (c) Cooperation on Tax Matters (i) Buyers and the Common Sellers shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to this Section and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Buyer and the Common Sellers agree (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Buyer or the Common Sellers, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Buyers or the Common Sellers, as the case may be, shall allow the other party to take possession of such books and records. (ii) Buyer and the Common Sellers further agree, upon request, to use their best efforts to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby). (iii) Buyer and the Common Sellers further agree, upon request, to provide the other party with all information that either party may be required to report pursuant to Section 6043 of the Code and all Treasury Department Regulations promulgated thereunder. (d) Certain Taxes. All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement (including any New York State Gains 65 71 Tax, New York City Transfer Tax and any similar tax imposed in other states or subdivisions), shall be paid by the Common Sellers and/or Preferred Seller, as the case may be, when due, and the Common Sellers and/or Preferred Seller will, at their own expense, file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees, and, if required by applicable law, Buyer will, and will cause its affiliates to, join in the execution of any such Tax Returns and other documentation. (e) The Buyers shall not amend any Tax Returns of the Company in respect of which any Common Seller bears any liability under this Agreement without the prior written consent of the Seller Representative. ARTICLE IX TERMINATION Section 9.1 Termination. (a) This Agreement may be terminated on or prior to the Closing Date as follows: (i) by written consent of the Company, the Seller Representative and Buyer Parent; (ii) by the Company, Seller Representative or Buyer Parent if a condition to its respective obligation to close set forth in Section 6.3 (or 6.1 or 6.2, as the case may be) cannot be satisfied at or prior to the date set forth in Section 9.1(a)(v) below unless the failure of such condition to be satisfied is as a result of the breach or non-performance of the condition by the party seeking to terminate this Agreement; (iii) by the Company or the Seller Representative if there has been a material breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of Buyer or Buyer Parent and such breach has not been cured within 20 Business Days after written notice to Buyer or Buyer Parent (provided that no cure period shall be required for a breach which by its nature cannot be cured) such that the conditions set forth in Section 6.2 or 6.3 cannot be satisfied at or prior to the date set forth in Section 9.1(a)(v) below; 66 72 (iv) by Buyer or Buyer Parent if there has been a material breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of any Common Seller or the Preferred Seller and such breach has not been cured within 20 Business Days after written notice to the Seller Representative and the Preferred Seller (provided that no cure period shall be required for a breach which by its nature cannot be cured) such that the conditions set forth in Section 6.1 or 6.3 cannot be satisfied at or prior to the date set forth in Section 9.1(a)(v) below; and (v) by Buyer Parent, the Company, the Seller Representative or the Preferred Seller if the Closing has not occurred on or before June 30, 2001. Notwithstanding Section 9.1(a)(ii)-(v) hereof, a party who is or an Affiliate of whom is in material breach of any of its obligations or representations and warranties hereunder such that the conditions set forth in Section 6.1, 6.2 or 6.3, as the case may be, cannot be satisfied at or prior to the date set forth in Section 9.1(a)(v) above, shall not have the right to terminate this Agreement pursuant to Section 9.1(a)(ii)-(v). (b) The termination of this Agreement shall be effectuated by the delivery by the party terminating this Agreement to each other party of a written notice of such termination. If this Agreement so terminates, it shall become null and void and have no further force or effect, except as provided in Section 9.2. Section 9.2 Survival After Termination. If this Agreement is terminated in accordance with Section 9.1 hereof and the transactions contemplated hereby are not consummated, this Agreement shall become void and of no further force and effect, except for the provisions of 5.8, 5.11 and this Section 9.2. None of the parties hereto shall have any liability in the event of a termination of this Agreement, except to the extent that such termination results from the breach, non-performance or violation by such party of any of its obligations under this Agreement or the failure of such party to use best efforts to fulfill such obligations, in which case such party shall remain liable to the other parties hereunder for any Loss suffered or incurred by such other parties as a result of or arising from such breach, non-performance or violation or the termination of this Agreement. 67 73 ARTICLE X MISCELLANEOUS Section 10.1 Amendments; Extension; Waiver. This Agreement may not be amended, altered or modified except by written instrument executed by each of the parties. The failure by any party hereto to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision nor in any way to affect the validity of this Agreement or any part hereof or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of or non-compliance with this Agreement shall be held to be a waiver of any other or subsequent breach or non-compliance. Any waiver made by the Company in connection with this Agreement shall not be valid unless agreed to in writing by the Seller Representative and the Preferred Seller. Section 10.2 Entire Agreement. This Agreement (including the Company Disclosure Memorandum, certificates and lists referred to herein, and any documents executed by the parties simultaneously herewith or pursuant thereto) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, except as provided herein, and supersedes all prior agreements and understandings, written and oral, among the parties with respect to the subject matter hereof. Each of the parties hereto agrees that it has not entered into any agreement or understanding written or oral with respect to the purchase and sale of shares of Capital Stock, except for this Agreement and written agreements which have been provided to each of the parties hereto on or prior to the date hereof. Section 10.3 Interpretation. When a reference is made in this Agreement to Sections, Exhibits or Annexes, such reference shall be to a Section of or Exhibit or Annex to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The phrases "the date of this Agreement," "the date hereof" and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date set forth in the first paragraph of this Agreement. Section 10.4 Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. 68 74 Section 10.5 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given when delivered in person, by telecopy (with written confirmation), by certified or registered mail (return receipt requested) or by an express courier (with written confirmation) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to the Company, the Common Sellers or the Seller Representative: National Asset Management Corporation 400 West Market Street, Suite 2500 Louisville, KY 40202 Telecopy: (502) 581-3636 Attention: Carl W. Hafele If to the Preferred Seller: National City Corporation 1900 East Ninth Street Cleveland, OH 44114 Telecopy: (216) 575-2336 Attention: General Counsel With copies to: Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Telecopy: (212) 735-2000 Attention: Ralph Arditi, Esq. If to Buyer or Buyer Parent: AMVESCAP PLC 11 Devonshire Square London EC2 M4YR United Kingdom Attention: Company Secretary 69 75 With copies to: AMVESCAP 1315 Peachtree Street, NE Suite 500 Atlanta, GA 30309 Telecopy: (404) 724-4280 Attention: Neil Williams, Esq. Alston & Bird LLP 1201 W. Peachtree Street Atlanta, GA 30309 Telecopy: (404) 881-7777 Attention: Sidney J. Nurkin, Esq. Section 10.6 Binding Effect; Persons Benefiting; Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement is intended or shall be construed to confer upon any entity or person other than the parties hereto and their respective successors and permitted assigns any right, remedy or claim under or by reason of their Agreement or any part hereof. No party to this Agreement may assign its rights and obligations hereunder without the consent of any other party; provided, however that without the consent of any Person, Buyer may assign its rights and obligations to a wholly owned subsidiary of Buyer Parent. No assignment of this Agreement or any rights herein by any party shall relieve such party of his, her or its obligations hereunder, including particularly, but without limitation, such party's obligations under Article VII hereof. Section 10.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same agreement, it being understood that all of the parties need not sign the same counterpart. Section 10.8 Governing Law. THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN THE PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO APPLICABLE CONFLICT OF LAW PROVISIONS THEREOF. 70 76 Section 10.9 Specific Performance. The Company, the Sellers, Buyer and Buyer Parent each acknowledge that, in view of the uniqueness of the Business and the transactions contemplated by this Agreement, each party would not have an adequate remedy at law for money damages in the event that the covenants to be performed after the Effective Time have not been performed in accordance with their terms, and therefore agree that the other parties shall be entitled to specific enforcement of the terms hereof and any other equitable remedy to which such parties may be entitled. Section 10.10 Waiver of Jury Trial and Punitive Damages. The parties to this Agreement agree to waive any right to a jury trial as to all disputes and any right to seek punitive damages in each case as related to the enforcement of this Agreement. Section 10.11 Seller Representative. (a) Each Common Seller, for himself and his respective heirs, executors, administrator, successors and assigns, hereby irrevocably appoints Carl W. Hafele (the "Seller Representative") as such Common Seller's agent and attorney-in-fact, authorizing him to act on behalf of such Common Seller to supervise the Closing on behalf of Common Seller, to execute and deliver any instruments of transfer or other documents required of such Common Seller and receive documents required of Buyers at the Closing, to take any other action on the part of such Common Seller permitted or required by this Agreement, and to administer on behalf of such Common Seller all other matters related hereto, as contemplated by this Agreement; provided that the Seller Representative may be removed or replaced by Common Sellers owning more than 50% of the total number of shares of Common Stock issued and outstanding immediately prior to the Closing. Each such Common Seller acknowledges that the appointment of the Seller Representative herein made is coupled with an interest and may not be revoked. The Seller Representative accepts his appointment and authorization to act as attorney-in-fact and agent of the Common Sellers. (b) In furtherance of this appointment herein made, each Common Seller, fully and without restriction: (i) agrees to be bound by all notices received and agreements and determinations made by and documents executed and delivered by the Seller Representative under this Agreement; (ii) authorizes the Seller Representative to (A) dispute or refrain from disputing any Claim made by either Buyer under this Agreement; (B) negotiate and compromise any dispute relating to such Common Seller which may arise under this Agreement, (C) exercise or refrain from exercising any remedies available to the Common Seller under this Agreement; 71 77 (D) sign any releases or other documents on behalf of such Common Seller with respect to any such dispute or remedy; (E) waive any condition contained in this Agreement; (F) give such instructions and do such other things and refrain from doing such other things as the Seller Representative in his sole discretion deems necessary or appropriate to carry out the provisions of this Agreement; and (G) retain such counsel, accountants and other professional advisors as the Seller Representative reasonably deems necessary to assist him in the performance of his duties hereunder and pay the fees, costs and expenses thereof out of funds coming into the hands of the Seller Representative. Each of the Common Sellers agrees that it will contribute pro rata (based on each Common Seller's share of the aggregate Merger Consideration paid to such Common Seller under Article II) such amounts as are requested by the Seller Representative as necessary for the Seller Representative to perform its duties under this Agreement as soon as practicable following such request (but in no case later than fifteen (15) days thereafter). (c) In the event of the death, incapacity or resignation of the Seller Representative, within fifteen (15) days of such death, incapacity or resignation, Common Sellers owning more than 50% of the total number of shares of Common Stock issued and outstanding immediately prior to the Closing (with such total number of shares reduced by any shares owned by the Seller Representative) shall elect a successor from among the Common Sellers and who shall agree in writing to accept such appointment. The decisions and actions of any successor Seller Representative shall be, for all purposes, those of a Seller Representative as if originally named herein. (d) The death or incapacity of any Common Seller shall not terminate the authority and agency of the Seller Representative. (e) Buyer and Buyer Parent shall be entitled to rely exclusively upon any communication given or other action taken by the Seller Representative pursuant hereto and shall not be liable for any action taken or not taken in reliance upon the Seller Representative. Buyer and Buyer Parent shall not be obligated to inquire as to the authority of the Seller Representative with respect to the taking of any action that the Seller Representative takes or purports to take on behalf of any Common Seller. 72 78 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. NATIONAL ASSET MANAGEMENT CORPORATION By: ------------------------------------------- Name: ------------------------------------- Title: ------------------------------------- AMVESCAP PLC By: ------------------------------------------- Name: ------------------------------------- Title: ------------------------------------- AVZ, INC. By: ------------------------------------------- Name: ------------------------------------- Title: ------------------------------------- COMMON SELLERS: ---------------------------------------------- Carl W. Hafele ---------------------------------------------- John W. Ferreby ---------------------------------------------- David B. Hiller ---------------------------------------------- William F. Chandler [Merger Agreement] 73 79 ---------------------------------------------- Stephen G. Mullins ---------------------------------------------- Michael C. Heyman ---------------------------------------------- Larry J. Walker ---------------------------------------------- Randall T. Zipfel ---------------------------------------------- David B. Chick ---------------------------------------------- Catherine R. Stodghill ---------------------------------------------- Erik N. Evans ---------------------------------------------- Brent A. Bell ---------------------------------------------- Matthew G. Bevin Mullins One LLC By: ------------------------------------------- Name: ------------------------------------- Title: ------------------------------------- Walker One LLC By: ------------------------------------------- Name: ------------------------------------- Title: ------------------------------------- [Merger Agreement] 74 80 Hafele One LLC By: ------------------------------------------- Name: ------------------------------------- Title: ------------------------------------- Zipfel One LLC By: ------------------------------------------- Name: ------------------------------------- Title: ------------------------------------- PREFERRED SELLER: NATIONAL CITY CORPORATION By: ------------------------------------------- Name: ------------------------------------- Title: ------------------------------------- OPTION HOLDER: ---------------------------------------------- Mark W. Lattis [Merger Agreement] 75 81 ANNEX A Definitions "Adjusted Closing Assets Under Management" shall mean, for any Client included in the Closing Revenue Run-Rate, the amount of assets under management by the Company for such Client as of the Base Date, as adjusted, (a) to reflect net cash flows (additions, withdrawals and reinvestment of distributions), new accounts and terminated accounts for the period beginning immediately after the Base Date and ending on the last day of the calendar month ending immediately prior to the Closing Date and (b) to exclude all assets of the Preferred Seller held in Separate Accounts and any Registered Funds sponsored by the Preferred Seller to which the Company acts as adviser or subadviser. "Adjusted Closing Revenue Run-Rate" shall equal the sum of (a) Forty Four Million Eight Hundred Fifty Thousand Dollars ($44,850,000) less (b) the annualized revenues, as of the Base Date, attributable to any fixed income assets managed by the Company (other than the equity portion of any balanced account managed by the Company), plus (c) the amount by which the Closing Revenue Run-Rate is greater than Forty Eight Million Three Hundred Thousand Dollars ($48,300,000) and less (d) the amount by which the Closing Revenue Run-Rate is less than Forty Three Million Seven Hundred Thousand Dollars ($43,700,000). "Adjusted Common Stock Cash Consideration" has the meaning set forth in Section 2.3(a). "Adjusted Earn-Out Assets Under Management" shall mean, for any Client included in the Earn-Out Revenue Run-Rate, the amount of assets under management by the Company for such Client on the last day of any Yearly Period, as adjusted: (a) to include (i) any assets under management of the Company attributable to client mandates that are established or expanded after the date of this Agreement that have been sourced, developed or obtained through the efforts of USIG, (ii) any assets under management attributable to client mandates of Buyer Parent or one of its Affiliates that are existing as of the date of this Agreement that are transferred in whole or in part to the Company and (iii) any assets under management of the Company attributable to client mandates that are established or expanded after the date of this A-1 82 Agreement that have been sourced, developed or obtained through the efforts of a business unit of Buyer Parent other than USIG; (b) to exclude all fixed income assets managed by the Company (but including the equity portion of any balanced account); (c) to include any assets subject to new investment management, advisory or sub-advisory agreements that are sold by USIG after the Effective Time, whether or not such assets are managed by the Company or any employees of the Company and whether or not such assets are in a separate account, pooled investment vehicle or wrap account, where such assets are to be managed in a U.S. growth equity or U.S. core equity style which is substantially similar to the management style presently employed by the Company; and (d) to include only those assets of the Preferred Seller held in Registered Funds sponsored by the Preferred Seller. "Adjusted Merger Consideration" means (i) Two Hundred Million ($200,000,000) Dollars, less (ii) an amount equal to five (5) times the amount by which the Closing Revenue-Run Rate is less than Forty Three Million Seven Hundred Thousand ($43,700,000) Dollars, or plus (iii) an amount equal to five (5) times the amount by which the Closing Revenue Run Rate is greater than Forty Eight Million Three Hundred Thousand ($48,300,000) Dollars, and less (iv) the amount by which Net Capital as shown on the Estimated Closing Balance Sheet and the Closing Schedule is less than $5,335,000 (a "Net Capital Shortfall") or plus (v) the amount by which Net Capital as shown on the Estimated Closing Balance Sheet and the Closing Schedule is greater than $5,335,000 (a "Net Capital Excess"). "Advisers Act" shall mean the Investment Advisers Act of 1940, as amended, and the rules and regulations of the SEC thereunder. "Affiliate" shall mean any Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified. "Affiliated Group" means any combined, consolidated or unitary tax group within the meaning of Code Section 1504(a) or any similar provision of state, local or foreign laws applicable to Taxes. A-2 83 "Aggregate Common Contingent Consideration" shall mean the Contingent Consideration less the Aggregate Preferred Contingent Consideration. "Aggregate Preferred Contingent Consideration" has the meaning set forth in Section 2.7(b)(i). "Agreement" shall mean this Agreement (including the Company Disclosure Memorandum or any annex or exhibit hereto) among the Sellers, the Company and the Buyers, as such may hereafter be amended. "Annual Cash Contingent Payment" shall mean, with respect to any Yearly period, the amount of the Annual Contingent Cash Consideration payable pursuant to Section 2.7(a). "Annual Contingent Cash Consideration" shall mean $15,000,000 in cash. "Annual Contingent Equity Consideration" shall mean a number of shares of Parent Stock equal to the quotient of (i) $10,000,000 divided by (ii) the Contingent Consideration Stock Price. "Annual Contingent Payment" shall mean the sum of the Annual Cash Contingent Payment and the Annual Equity Contingent Payment. "Annual Equity Contingent Payment" shall mean, with respect to any Yearly Period, the amount of the Annual Contingent Equity Consideration payable pursuant to Section 2.7(a). "Annual Preferred Contingent Cash Consideration" has the meaning set forth in Section 2.7(b)(i). "Annual Preferred Contingent Equity Consideration" has the meaning set forth in Section 2.7(b)(i). "Applicable Law" shall mean any domestic or foreign federal, state or local statute, law, ordinance, rule, administrative interpretation, regulation, order, writ, injunction, directive, judgment or decree applicable to the Sellers, the Company, Buyer, Buyer Parent or any of their respective Affiliates, properties, assets, officers, directors or employees, as the case may be. A-3 84 "Asset Management Fees" shall mean all revenues of the Company derived from its investment management and advisory activities including (a) base management fees based solely on the amount of assets under management and (b) fixed fee arrangements but excluding, in the case of (a) and (b), any consulting fee, performance fee, incentive fee or carried interest or similar fee or arrangement to the extent dependent upon the performance of assets under management. "Base Date" shall mean December 31, 2000. "Base Revenue Run-Rate" shall be equal to $43,700,000. "Base Shares" shall be equal to the number of shares of Parent Stock determined by dividing fifty percent (50%) of the Adjusted Merger Consideration (a) plus fifty percent (50%) of the amount of a Net Capital Shortfall, if any, or (b) less fifty percent (50%) of the amount of a Net Capital Excess, if any, by the Signing Stock Price. "Business" shall mean the business of the Company in rendering investment advisory, investment management, consulting, administrative, and related services for compensation. "Business Day" shall mean any day other than a Saturday, a Sunday or a day on which banks in the State of New York or the City of London are generally closed for regular banking business. "Buyer" has the meaning set forth in the preamble to this Agreement and includes any permitted direct or indirect successor or assign. "Buyer Material Adverse Effect" shall mean any matter or matters affecting Buyer, Buyer Parent or any of their Affiliates that has or have a material adverse effect on the business, assets, financial condition or results of operations of such entities taken as a whole or on the ability of the Buyers to complete the Closing; provided that a decline in the value of assets under management by such entities resulting from currency fluctuations or a general decline in securities prices and any consequences thereof will be excluded from any determination as to the occurrence of a Buyer Material Adverse Effect. "Buyer Parent" has the meaning set forth in the preamble to this Agreement and includes any permitted direct or indirect successor or assign. A-4 85 "Buyer Parent Report" has the meaning set forth in Section 4.8. "Capital Stock" shall mean the Preferred Stock and Common Stock. "Cash Merger Consideration" shall mean fifty percent (50%) of the Adjusted Merger Consideration (a) less fifty percent (50%) of the amount of a Net Capital Shortfall, if any or (b) plus fifty percent (50%) of the amount of a Net Capital Excess, if any. "Client" shall mean any client to which the Company provides investment advisory, investment management, consulting, administrative and related services as of a particular date, including, without limitation, any Registered Fund. "Closing" has the meaning set forth in Section 2.8. "Closing Date" has the meaning set forth in Section 2.8. "Closing Revenue Run-Rate" shall mean the aggregate annualized fees payable to the Company for investment advisory services under Investment Management Agreements for all Clients of the Company in effect on the last day of the calendar month ending immediately prior to the Closing Date (excluding any portion thereof attributable to the accounts of Clients of the Company on the Base Date who do not Consent in accordance with Section 5.3 hereof to the assignment or deemed assignment of their respective Investment Management Agreements resulting from the transactions contemplated hereby), calculated by multiplying the Adjusted Closing Assets Under Management by the applicable annual fee rate for each Account included in Adjusted Closing Assets Under Management. The calculation of the Closing Revenue Run-Rate shall exclude from revenue any performance-based fees and shall include only net revenues to the Company giving effect to, and taking into account, any fee waivers, caps or expense limitations, or expense reimbursement, and any unreimbursed payments by the Company to any brokers, dealers or other Persons with respect to the distribution of shares of the Registered Fund Clients or services provided to Registered Fund Client shareholders pursuant to any distribution or shareholder services agreements, and any such revenues shall be servicing fees payable by the Company. "Closing Schedule" has the meaning set forth in Section 2.9. "Closing Shares" shall be equal to the number of shares of Parent Stock determined by dividing fifty percent (50%) of the Adjusted Merger Consideration (a) A-5 86 plus fifty percent (50%) of the amount of a Net Capital Shortfall, if any, or (b) less fifty percent (50%) of the amount of such a Net Capital Excess, if any, by the Closing Stock Price. "Closing Stock Price" shall mean, in respect of a share of Parent Stock, the quotient obtained by dividing (a) the aggregate of the Daily Value of Trades for each day during the period of 10 consecutive trading days immediately preceding the Closing Date by (b) the aggregate volume of shares of Parent Stock used to calculate such Daily Value of Trades. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Common Seller" has the meaning set forth in the preamble to this Agreement. "Common Seller Participation Percentage" shall mean, with respect to any Common Seller, the quotient, expressed as a percentage, of (a) the number of shares of Common Stock owned by such Common Seller at the Effective Time and (b) the total number of shares of Common Stock issued and outstanding immediately prior to the Effective Time. "Common Stock" shall mean the common stock, no par value, of the Company. "Common Stock Cash Consideration" shall mean the amount equal to the Per Share Cash Consideration multiplied by the number of shares of Common Stock issued and outstanding immediately prior to the Closing. "Common Stock Equity Consideration" shall mean the number of shares of Parent Stock equal to the Per Share Equity Consideration multiplied by the number of shares of Common Stock issued and outstanding immediately prior to the Closing. "Companies Act" shall mean the Companies Act 1985, as amended, and all rules, regulations and statutory instruments thereunder. "Company" shall mean, prior to the Effective Time, National Asset Management Corporation, and thereafter, the Surviving Corporation and any Affiliate of the Surviving Corporation to which substantially all of the assets and liabilities of the Company may be transferred or assigned after the Effective Time. A-6 87 "Company Disclosure Memorandum" shall mean the memorandum prepared by the Company and delivered to the Buyers contemporaneously with the execution and delivery of this Agreement and setting forth items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in, or as an exception to, a representation and warranty by any Sellers herein. "Company Facility" means any improved real property owned or leased by the Company and on which the business of the Company is or has been conducted. "Company Intellectual Property" has the meaning set forth in Section 3.16(c). "Company Material Adverse Effect" shall mean any matter or matters affecting the Company that has or have a material adverse effect on the business, assets, financial condition or results of operations of the Company taken as a whole or on the ability of the Company to complete the Closing; provided that (a) a decline in the value of assets under management by the Company resulting from currency fluctuations or a general decline in securities prices and any consequences thereof will be excluded from any determination as to the occurrence of a Company Material Adverse Effect and (b) a reduction in the Revenue Run-Rate between the Base Date and the Closing Date in and of itself, shall not constitute a Company Material Adverse Effect. "Company Related Party" means any corporation in which at least fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or at least fifty percent (50%) of the value of all classes of stock is or was owned directly or indirectly by the Company. "Confidentiality Agreement" shall mean that certain letter agreement dated as of November 3, 2000 relating to confidential information provided by the Company to Buyer and its Affiliates. "Consent" shall mean any and all filings, consents or approvals (including negative consents), whether from a regulatory authority or other third party, that are necessary in connection with (i) the execution and delivery by the Company, the Sellers and the Buyers of this Agreement and (ii) the consummation by the Company, the Sellers and the Buyers of the transactions contemplated hereby. "Contingent Cash Consideration" shall mean the aggregate amounts payable in cash as provided in Section 2.7(a). A-7 88 "Contingent Consideration" shall mean the sum of the Contingent Cash Consideration and the Contingent Equity Consideration. "Contingent Consideration Stock Price" shall mean, in respect of a share of Parent Stock, the quotient obtained by dividing (a) the aggregate of the Daily Value of Trades for each day during the period of 20 consecutive trading days immediately preceding the date of this Agreement; by (b) the aggregate volume of shares of Parent Stock used to calculate such Daily Value of Trades. "Contingent Equity Consideration" shall mean the aggregate number of shares of Parent Stock issuable as provided in Section 2.7(a). "Contingent Payment Statement" has the meaning set forth in Section 2.7(c)(i). "Contingent Percentage" shall mean, with respect a Yearly Period, (a) the Yearly Period CAGR for such Yearly Period less 15%, divided by (b) 25%. "Contract" means, with respect to any Person, any agreement, indenture, undertaking, debt instrument, contract, guarantee, loan, note, mortgage, arrangement, license, lease or other commitment, whether written or oral, to which such Person or any of its Subsidiaries is a party or by which any of them is bound or to which any of their assets or properties is subject. "Daily Value of Trades" shall mean, in respect of the shares of Parent Stock on any trading day, the United States Dollar Equivalent of the product of (a) the volume weighted average price of shares of Parent Stock on the LSE (or, if the shares of Parent Stock are not then listed on the LSE, on such other stock exchange or automated quotation system on which the shares of Parent Stock are listed or quoted, as the case may be, as may be selected by the board of directors of Buyer Parent for such purpose) on such date, as determined by Bloomberg L.P. or other reputable, third party information source selected by the board of directors of Buyer Parent and (b) the aggregate volume of shares of Parent Stock traded on such date on the LSE or such other stock exchange or automated quotation system and used to calculate such volume weighted average price; provided that any such selections by the board of directors of Buyer Parent shall be conclusive and binding. "DGCL" shall mean the General Corporation Law of the State of Delaware. A-8 89 "Distribution Agreements" shall mean all agreements or arrangements for the sale or distribution of shares of any Registered Fund pursuant to Rule 12b-1 of the Investment Company Act. "Earn-Out Revenue Run-Rate" shall mean, with respect to any Yearly Period, the aggregate annualized fees payable to the Company for investment advisory and subadvisory services under Investment Management Agreements for all Clients of the Company in effect on the last day of such Yearly Period, calculated by multiplying the Adjusted Earn-Out Assets Under Management for that Yearly Period by the applicable annual fee rate for each account included in Adjusted Earn-Out Assets Under Management; provided, that, for purposes of the Earn-Out Revenue Run-Rate, the aggregate annualized fees for the assets under management described in clauses (a)(ii) and (iii) of the definition of "Adjusted Earn-Out Assets Under Management" shall be equal to 40% of the amount of such annualized fees for such Yearly Period. The calculation of the Earn-Out Revenue Run-Rate shall exclude from revenue any performance-based fees and shall include only net revenues to the Company giving effect to, and taking into account, any fee waivers, caps or expense limitations, or expense reimbursement, and any unreimbursed payments by the Company to any brokers, dealers or other Persons with respect to the distribution of shares of the Registered Fund Clients or services provided to Registered Fund Client shareholders pursuant to any distribution or shareholder services agreements, and any such revenues shall be servicing fees payable by the Company. "Effective Time" and "Effective Date" shall have the meanings set forth in Section 2.2. "Employment Agreement" shall mean that certain employment agreement to be entered into between each of the Common Sellers that is a natural person and the Buyer concurrently with the execution of this Agreement "Encumbrance" shall mean any mortgage, pledge, hypothecation, rights of others, claim, security interest, encumbrance, title defect, title retention agreement, voting trust agreement, interest, equity, option, lien, charge, easement encroachments or other conditions, commitments, restrictions or limitations of any nature whatsoever. "Environmental Laws" shall mean all applicable local, state and federal environmental, health and safety laws and regulations, including, without limitation, the Resource Conservation and Recovery Act, the Comprehensive Environmental A-9 90 Response, Compensation and Liability act, the Clean Water Act, the Federal Clean Air Act, and the Occupational Safety and Health act, each as amended. "Equity Merger Consideration" shall equal the Closing Shares; provided that if the Closing Shares are more than 110% of the Base Shares, the Equity Merger Consideration shall be 110% of the Base Shares, and if the Closing Shares are less than 90% of the Base Shares, the Equity Merger Consideration shall be 90% of the Base Shares. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules, regulations and class exemptions of the Department of Labor thereunder. "ERISA Affiliate" shall mean any trade or business, whether or not incorporated, which together with the Company would be deemed a single employer within the meaning of ERISA. "Estimated Closing Balance Sheet" has the meaning set forth in Section 2.9. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder. "Filings" has the meaning set forth in Section 3.6. "Final Statement" has the meaning set forth in Section 2.9(b). "Financial Statements" has the meaning set forth in Section 3.8. "GAAP" shall mean generally accepted accounting principles as used in the United States of America as in effect at the time any applicable financial statements were prepared or any act requiring the application of GAAP was performed. "Governmental Authority" shall mean any government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including the SEC or any other government authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof, and any court, tribunal or arbitrator(s) of competent jurisdiction, and any governmental or non-governmental self-regulatory organization, agency or authority. A-10 91 "Hazardous Material" means (i) any hazardous substance, hazardous material, hazardous waste, regulated or toxic substance (as those terms are defined by any applicable Environmental Laws) and (ii) any chemicals, pollutants, contaminants, petroleum, petroleum products, or oil, and also any asbestos requiring abatement, removal, or encapsulation pursuant to the requirements of Governmental Authorities and any polychlorinated biphenyls. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. "IMRO" has the meaning set forth in Section 4.8. "Indebtedness", as applied to any Person, shall mean obligations relating to capital leases, payments in respect of the deferred purchase price of property, letters of credit, and amounts from time to time outstanding under loan agreements and other agreements relating to the borrowing of money or extension of credit. "Indemnifiable Claim" shall mean any Loss for which a Person is entitled to indemnification under this Agreement. "Indemnified Party" shall mean the Person entitled to the benefits of indemnification hereunder. "Indemnifying Party" shall mean the Person obligated to provide indemnification hereunder. "Intellectual Property" shall mean all domestic and foreign letters patent, software, know-how, trade names, common law and other trademarks and service marks, copyrights, and all registrations or applications for registration of any of the foregoing, and all inventions, processes, designs, formulae, trade secrets, know-how, confidential information, data and documentation, and all similar intellectual property rights, used in or pertaining to the business of the Company. "Interim Advisory Contract" has the meaning set forth in Section 5.3(a). "Investment Company" means an investment company, as such term is defined in the Investment Company Act, and any entity that, but for the provision of Section 3(c) of such Act, would be an investment company under such Act. A-11 92 "Investment Company Act" shall mean the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder. "Investment Company Board" means the board of directors or trustees (or Persons performing similar functions) of an Investment Company. "Investment Management Agreements" shall mean all agreements and arrangements for the performance of investment advisory or investment management services for Clients or on behalf of third parties. "IRS" shall mean the United States Internal Revenue Service. "KBCA" shall mean the Kentucky Business Corporation Act. "Lease" shall mean any agreement, whether written or oral, pursuant to which the Company enjoys the right, as a lessee or sublessee, to use or occupy any real or tangible personal property in the conduct of the business of the Company. "Leasehold Improvements" shall mean all improvements to the leased properties installed or constructed by or on behalf of the Company and used in connection with the operation or maintenance of its offices. "LIBOR" means, with respect to any date of determination, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to such date for a term of one month. If for any reason such rate is not available, the term "LIBOR" shall mean, with respect to any date of determination, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to such date for a term of one month; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates. "Loss" shall mean any and all direct out-of-pocket losses, liabilities, damages, judgments, awards, expenses for penalties, fines, costs and expenses (including reasonable attorneys', accountants', experts' and consultants' fees and expenses and court costs) that are imposed upon or otherwise incurred, suffered or sustained by a Person; provided that Losses shall not include foregone profits, damages arising from A-12 93 alleged diminution of the value of a Person's business (including losses calculated on multiples of earnings or book value) or any other consequential damages. "LSE" means the London Stock Exchange. "Merger Consideration" shall mean the sum of the Preferred Stock Cash Consideration, the Preferred Stock Equity Consideration, the Common Stock Cash Consideration, and the Common Stock Equity Consideration. "NASD" shall mean the National Association of Securities Dealers, Inc. "Net Capital" shall mean as at any date the value of all tangible assets existing on that date, less the amount of all liabilities existing on that date calculated in the same manner as provided in Section 2.9 and as reflected on the Estimated Closing Balance Sheet or the Final Statement, as the case may be. "Net Capital Excess" has the meaning set forth in the defined term "Adjusted Merger Consideration" in this Annex A. "Net Capital Shortfall" has the meaning set forth in the defined term "Adjusted Merger Consideration" in this Annex A. "Notice" has the meaning set forth in Section 5.3(b). "Option" has the meaning set forth in Section 5.15. "Organizational Documents" shall mean the By-laws, Articles of Incorporation and similar organizational documents of the Company, as amended from time to time. "Parent Stock" shall mean the ordinary shares of AMVESCAP PLC with a nominal value of 25 pence per share. "Per Share Cash Consideration" has the meaning set forth in Section 2.3(a)(ii). "Per Share Equity Consideration" has the meaning set forth in Section 2.3(a)(ii). "Permit" shall mean any approval, authorization, certificate, consent, easement, filing, franchise, license, notice, permit, registration or right of any Governmental Authority or any other Person to which any Person is a party or that is A-13 94 or may be binding upon or inure to the benefit of any Person or its securities, assets or business. "Permitted Encumbrances" shall mean all Encumbrances which are: (1) for Taxes or assessments that are not yet due and payable or which are being contested in good faith and by appropriate proceedings if reserves and/or deferred tax valuation allowances in amounts required by GAAP are maintained on the Company's books; (2) Encumbrances or pledges to secure payments of workmen's compensation and other payments, unemployment and other insurance, old-age pensions or other social security obligations, or the performance of bids, tenders, leases, contracts, public or statutory obligations, surety, stay or appeal bonds, or other similar obligations arising in the ordinary course of business; (3) workmen's, repairmen's, warehousemen's, vendors' or carriers' Encumbrances or other similar Encumbrances arising in the ordinary course of business and securing sums which are not past due, or deposits or pledges to obtain the release of any such Encumbrances; (4) statutory landlords' Encumbrances under leases to which the Company is a party; (5) any Encumbrance constituting a renewal, extension or replacement of an Encumbrance constituting a Permitted Encumbrance; (6) leases or subleases granted to other Persons not materially interfering with the conduct of the Business; (7) zoning restrictions, easements, rights of way, licenses and restrictions on the use of Real Property or minor irregularities in title thereto, which do not materially impair the use of such property in the normal operation of the Business or the value of such property for the purpose of such Business; (8) statutory or common law Encumbrances (such as rights of set-off) on deposit accounts of the Company; A-14 95 (9) Encumbrances set forth, described in or established by any agreement pursuant to which the Company has leased, licensed or obtained any other right to use any property of another Person; (10) Encumbrances which do not materially impair the use, operation, value or marketability of the asset or property to which it relates; and (11) Encumbrances disclosed in the Schedules hereto delivered in connection with the execution and delivery hereof or in the text accompanying the Financial Statements. "Person" shall mean any individual, corporation, company, partnership (limited or general), joint venture, association, trust or other entity. "Plan" has the meaning set forth in Section 3.15. "Preferred Dividend Amount" shall equal (a) the amount of the unpaid dividend due and payable with respect to the Preferred Stock pursuant to the terms of such Preferred Stock in the Organizational Documents assuming, solely for purposes of this calculation, that such Preferred Stock is being redeemed on March 31, 2001 in accordance with its terms as set forth in such Organizational Documents less (b) the amount of any dividends paid by the Company to the Preferred Seller after the dividend due and payable on February 15, 2001. "Preferred Participation Percentage" shall mean 25%. "Preferred Seller" has the meaning set forth in the preamble to this Agreement. "Preferred Stock" shall mean the Class A preferred stock, no par value, of the Company. "Preferred Stock Cash Consideration" has the meaning set forth in Section 2.3(a)(i). "Preferred Stock Equity Consideration" has the meaning set forth in Section 2.3(a)(ii). A-15 96 "Prior Purchase Agreement" shall mean the Agreement for Purchase and Sale of Common Stock, dated March 6, 1998, among the Preferred Seller, the Company and certain other individuals. "Real Property" shall mean all real property, appurtenances thereto, fixtures and improvements, rights in connection therewith, or any interest therein, including, without limitation, leasehold estates. "Registered Fund" means an Investment Company registered under the Investment Company Act that is advised or subadvised by the Company. "Rights" means, with respect to any Person, all arrangements, commitments, agreements, securities or obligations convertible into or exercisable or exchangeable for, or giving any person any right to subscribe for or acquire, or any options, calls or commitments relating to, directly or indirectly, capital and/or voting securities of such Person, or any stock appreciation right or other instrument the value of which is determined in whole or in part by reference to the market price or value of, shares of capital stock of such Person or other. "SEC" shall mean the United States Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended. "Sellers" has the meaning set forth in the preamble to this Agreement. "Seller Representative" has the meaning set forth in Section 10.11. "Separate Accounts" shall mean all Clients other than the Registered Funds and wrap accounts of the Company's Managed Accounts Group. "Services Agreements" shall mean all agreements and arrangements for the performance of administrative services, custodial services, transfer agency services, portfolio accounting services and shareholder services for a Registered Fund. "Signing Stock Price" shall mean, in respect of a share of Parent Stock, the quotient obtained by dividing (a) the aggregate of the Daily Value of Trades for each day during the period of 10 consecutive trading days immediately preceding the date of this Agreement by (b) the aggregate volume of shares of Parent Stock used to calculate such Daily Value of Trades. A-16 97 "Software" shall mean all of the rights of the Company in any and all computer programs consisting of sets of statements or instructions to be used directly or indirectly in a computer, including all source code and object code therefor, whether recorded on paper, magnetic media or other electronic or non-electronic device, and all documentation, including, without limitation, user manuals and training materials, relating to any of the foregoing. "Subsidiary" shall mean any corporation, partnership (general or limited), limited liability corporation or other form of business entity of which more than one-half of either the voting power or economic is owned, directly or indirectly, by the Company. "Surviving Corporation" shall have the meaning set forth in section 2.1(a). "Tax" or "Taxes" shall mean any federal, state, county, local, or foreign taxes, charges, fees, levies, imposts, duties, or other assessments, including income, gross receipts, excise, employment, sales, use, transfer, license, payroll, franchise, severance, stamp, occupation, windfall profits, environmental, federal highway use, commercial rent, customs duties, capital stock, paid-up capital, profits, withholding, Social Security, single business and unemployment, disability, real property, personal property, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other tax or governmental fee of any kind whatsoever, imposes or required to be withheld by the United States or any state, county, local or foreign government or subdivision or agency thereof, including any interest, penalties, and additions imposed thereon or with respect thereto. "Tax Return" shall mean any report, return, information return, or other information required to be supplied to a Governmental Authority in connection with Taxes, including any return of an affiliated or combined or unitary group that includes the Company and any amendments thereof. "Taxing Authority" shall mean the IRS and any other domestic or foreign Governmental Authority responsible for the administration of any Taxes. "Technology Systems" has the meaning set forth in Section 3.16(a). "Third Party Claim" has the meaning set forth in Section 7.5(b). "Title IV Plan" has the meaning set forth in Section 3.14(c). A-17 98 "12b-1 Plan" has the meaning set forth in Section 3.6(c) "United States Dollar Equivalent" means in respect of an amount expressed in the currency other than United States dollars (the "Foreign Currency Amount") at any date the product obtained by multiplying: (a) the Foreign Currency Amount by (b) the noon spot exchange rate on such date for such foreign currency expressed in United States dollars as reported by Citibank or, in the event such spot exchange rate is not available, such spot exchange rate on such date for such foreign currency expressed in United States dollars as may be deemed by the board of directors of Buyer Parent to be appropriate for such purpose. "USIG" shall mean the U.S. institutional group business unit of Buyer Parent and any other business unit of Buyer Parent which succeeds, in whole or in part, to the business of such U.S. institutional group business unit. "Wire Transfer" shall mean a payment in immediately available funds by wire transfer in lawful money of the United States of America to such account or accounts as shall have been designated by notice to the paying party. "Yearly Period" shall mean the twelve-month period beginning on the day immediately following the last day of the calendar month ending immediately prior to the Closing Date and each of the next two succeeding twelve-month periods. "Yearly Period CAGR" shall mean, with respect to a Yearly Period, the annual compounded growth rate in the Earn-Out Revenue Run-Rate over the Adjusted Closing Revenue Run-Rate. For purposes of calculating the Yearly Period CAGR, the following formula shall be utilized: ([Nth root of (Earn-Out Revenue Run-Rate for year N/Adjusted Closing Revenue Run-Rate)] - 1), whereby N shall equal the respective Yearly Period and shall be either 1, 2 or 3. A-18 -----END PRIVACY-ENHANCED MESSAGE-----