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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, 1998
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
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(Exact name of registrant as specified in its charter)
England
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(Jurisdiction of incorporation or organization)
11 Devonshire Square, London, EC2M 4YR, United Kingdom
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(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)
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American Depositary Shares each New York Stock Exchange
representing 5 Ordinary Shares of
25 pence par value per share(1)
Ordinary Shares of 25 pence par value per share London Stock Exchange
SBF - Paris Bourse
New York Stock Exchange(2)
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, 1998
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Ordinary Shares, 25 pence par value 670,023,406
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
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(1) All figures with respect to the American Depositary Shares have
been adjusted to give effect to a one-for-two adjustment, effected in April
1998, to the Ordinary Share per American Depositary Share ratio, to five
Ordinary Shares per American Depositary Share from ten Ordinary Shares per
American Depositary Share, unless otherwise indicated.
(2) 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.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
INTRODUCTION
AMVESCAP PLC (the "Registrant" or "Company") was incorporated on
December 19, 1935 under the laws of England. The Company's ordinary shares, 25
pence par value per share (the "Ordinary Shares"), are listed for trading on
the London Stock Exchange (the "LSE") and SBF - Paris Bourse; and the Company's
American Depositary Shares which represent interests in Ordinary Shares are
listed for trading on the New York Stock Exchange (the "NYSE"). Except as the
context otherwise requires, the terms "AMVESCAP" and "Company" refer
collectively to the Registrant and its subsidiaries.
The Company has issued American Depositary Shares ("ADSs"), each of
which represents five Ordinary Shares or the right to receive five Ordinary
Shares deposited with The Bank of New York (the "Depositary"). All figures with
respect to the ADSs have been adjusted to give effect to a one-for-two
adjustment, effected in April 1998, to the Ordinary Share per ADS ratio, to
five Ordinary Shares per ADS from ten Ordinary Shares per ADS, unless otherwise
indicated. The Depositary issues American Depositary Receipts ("ADRs") which
may represent any number of ADSs.
This report contains the consolidated balance sheets of the Company
as of December 31, 1998 and 1997 and statements of profit and loss, total
recognized gains and losses and cash flows for the years ended December 31,
1998, 1997 and 1996 (the "Consolidated Financial Statements"). The Consolidated
Financial Statements and, unless otherwise indicated, other financial
information concerning the Company included herein and in the Company's 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 the Company differs in certain important respects from generally accepted
accounting principles in the United States ("U.S. GAAP"). See Item 9.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Summary of Differences Between U.K. GAAP and U.S. GAAP" and Note
25 to the Consolidated Financial Statements for a description of the principal
differences between U.K. GAAP and U.S. GAAP as they relate to the Company and a
reconciliation to U.S. GAAP net income for the years ended December 31, 1998,
1997 and 1996 and shareholders' equity as of December 31, 1998 and 1997.
The Company furnishes the Depositary with annual reports containing
a review of operations, audited consolidated financial statements prepared in
accordance with U.K. GAAP and an opinion thereon by independent auditors to the
Company. The annual reports include a reconciliation of such financial
statements to amounts determined in accordance with U.S. GAAP. The Company also
furnishes 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 such reports to all record
holders of ADSs. In addition, the Company furnishes the Depositary with copies
of all notices of shareholders' meetings and other reports and communications
that are distributed generally to shareholders of the Company, and the
Depositary arranges for the mailing of such notices, reports and communications
to all record holders of ADSs. The Company is currently exempt from the rules
under the Securities Exchange Act of 1934, as amended, prescribing the form and
content of proxy statements.
The Company publishes its consolidated financial statements in pounds
sterling sterling. As used herein, references to "U.S. dollars", "$" or "cents"
are to United States currency and references to "pounds sterling",
"pence" or "p" are to United Kingdom currency. See Item 9. "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for a
discussion of the effects of foreign exchange rates on the Company and its
subsidiaries. The Company's statements of profit and loss, balance sheets and
other financial statements are affected by currency translations and
fluctuations. See Note 1 to the Consolidated Financial Statements for the
Company's policies regarding foreign currency translations.
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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 Depository
for distribution to ADS holders. Additionally, currency fluctuations will affect
the U.S. dollar equivalent of the pounds sterling price of the Company's
Ordinary Shares on the LSE and, as a result, are likely to affect the market
price of the ADSs on the NYSE.
The following table sets forth, for the periods and dates indicated,
certain information concerning the Noon Buying Rate for pounds sterling
expressed in U.S. dollars per pounds 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 March 5, 1999, the Noon Buying Rate was $1.61 per
pounds sterling 1.00. These translations should not be construed as
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. Such rates are not used by the Company in the preparation of
its Consolidated Financial Statements included elsewhere in this Form 20-F.
EXCHANGE RATES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR END AVERAGE(1) HIGH LOW
- ----------------------- -------- ---------- ---- ---
<S> <C> <C> <C> <C>
1994.................... 1.57 1.54 1.64 1.46
1995.................... 1.55 1.58 1.64 1.53
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
</TABLE>
(1) The average of the exchange rates on the last trading day of each month
during the relevant period.
The Company's executive offices are located at 11 Devonshire Square,
London EC2M 4YR, England and its telephone number is 011-44-171-626-3434. The
Company also has a home page on the Internet at www.amvescap.com. Information
contained in the Company's home page shall not be deemed to be part of this
Form 20-F.
OVERVIEW
AMVESCAP is one of the world's largest independent investment
management groups with $275.4 billion of assets under management at December
31, 1998. The Company has a significant presence in the institutional and
retail segments of the investment management industry in North America, Europe
and Asia. Unlike many of its competitors, the Company's business is focused
entirely on investment management.
The Company manages a full range of domestic, foreign and global
investment products including equity, balanced, fixed income, money market and
real estate investment categories. With a team of approximately 900 investment
professionals located around the world, the Company is committed to managing
assets regionally and believes that its local investment managers provide the
Company with a competitive advantage. In addition, within each investment
product category the Company utilizes multiple investment styles, which allows
the Company to offer its worldwide clients a diverse range of product
alternatives. Of the $275.4 billion of assets under management as of December
31, 1998, approximately two-thirds were invested in equities and approximately
one-third in fixed income securities.
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Within each of its geographic markets, the Company offers a wide array
of distribution alternatives. In North America, the Company offers products and
services to retail and institutional clients including both load and no-load
mutual funds, private account management, institutional funds and "wrap"
accounts. Retail distribution in the United States includes products sold
primarily through financial intermediaries under the AIM brand name and
directly to investors under the INVESCO brand name. Retail distribution in
Canada includes products sold primarily through financial intermediaries under
the AIM and AIM GT brand names. Outside of North America, the Company offers
its investment products through unit trusts and other European and Asian mutual
funds as well as private accounts for retail and institutional investors. The
Company's retail and institutional clients are located in more than 100
countries.
The Company believes that it is one of the few independent investment
managers with the ability to offer a broad range of investment products in a
variety of investment styles through diverse distribution channels for
different types of clients in the major capital markets around the world.
In recent years, the Company has experienced substantial growth, both
internally and through acquisitions, including the February 1997 acquisition
(the "AIM Merger") of A I M Management Group Inc. ("AIM"), with $67 billion in
assets under management when acquired, and the May 29, 1998, acquisition (the
"GT Acquisition") of the Asset Management Division of Liechtenstein Global
Trust AG ("GT"), with $46.8 billion in assets under management when acquired.
AMVESCAP has organized its operations with a view to maximizing the
benefits of a local presence while exploiting the synergies of a global
organization. The Company is organized into four operating groups. The Managed
Products Group ("Managed Products") manages and distributes the AIM family of
101 load and institutional mutual funds, the INVESCO family of 41 no-load
mutual funds, and 25 load mutual funds in Canada, offering a broad range of
equity, balanced, fixed income, real estate, international and money market
investment products. These products are sold primarily to retail investors in
North America. The U.S. Institutional Group ("U.S. Institutional") manages
separate account portfolios, including growth, value and quantitative equity,
fixed income, balanced, stable value, venture capital and real estate
portfolios, for U.S. institutional and individual investor accounts. The
INVESCO Global Group ("INVESCO Global") comprises the Company's operations
outside North America, including retail and institutional investment management
and related marketing activities primarily in Europe and Asia. On January 1,
1998, the Company established a new operating group, the Retirement and Benefit
Services Group ("Retirement and Benefit Services"), which coordinates, develops
and manages defined contribution plans, such as 401(k) plans, and other
retirement assets and services, to further capitalize on the worldwide trend
toward employee funding of retirement income.
Each business unit of the Company markets the products and services
offered by other business units of the Company to its local and regional
clients. Subject to applicable regulatory requirements, the international
offices supply products for the Company's extensive North American marketing
and distribution network, while providing international distribution for
AMVESCAP's North American products. These cross marketing efforts are
complemented by a variety of advisory and sub-advisory arrangements which allow
business units to access directly specific areas of investment management
expertise located elsewhere in the Company. The Company believes that its
ability to develop and distribute products across businesses via multiple
delivery channels provides a competitive advantage.
BUSINESS STRATEGY
The Company has developed a strategy based on the following elements
which it believes are essential to maintain a significant presence in the
global asset management industry - globalization, diverse product offerings,
multiple distribution channels and financial strength. In addition, the Company
believes that an experienced staff of professional employees whose interests
are aligned with shareholders is a key factor in the Company's ability to
implement these goals.
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GLOBALIZATION
The Company believes 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. The Company has made, and continues to make, significant
investments in its international operations to establish offices with both
investment and client service professionals in each of the major world capital
markets. The Company believes that these investments will enable the Company to
better capture growth opportunities in those markets. The Company intends to
continue to expand its global operations to take advantage of geographic
markets where the Company believes the investment management business has the
potential for substantial growth, such as Canada, Germany, France, Italy, Japan
and elsewhere in Europe and Asia.
DIVERSE PRODUCT OFFERINGS
The Company believes that its ability to offer a full range of retail
and institutional investment products managed locally in a wide variety of
investment styles enhances its opportunities for attracting new clients and
cross-selling its products to existing clients. Each of the Company's business
units markets the products and services offered by other Company units to its
local and regional clients to enhance the range of investment management
products and services offered to all clients of the Company. The Company's
broad product line includes a large and varied number of equity products, the
fastest growing segment of the investment management industry. The Company's
strategy is to seek to further capitalize on this shift as the demand for
equity products continues to increase around the world. In North America, the
Company believes that its diverse product line allows it to be well positioned
for growth in both the retail and institutional segments. In the retail
segment, having a full range of mutual funds assists the Company in attracting
a greater number of investors and increases the potential to capture a greater
percentage of the investment portfolios of current individual investors. In the
institutional segment, management believes that a broad product line positions
the Company to meet the growing demand from large institutional investors to
use a smaller number of investment managers that offer many products as opposed
to a large number of specialty managers. The Company seeks to complement its
existing product offerings through both the internal development and
acquisition of new investment products and the Company's expansion into new
countries.
MULTIPLE DISTRIBUTION CHANNELS
The Company's extensive distribution network enables it to market its
products to retail and institutional clients in more than 100 countries
throughout the world. The Company sells its products directly to investors
through marketing offices in North America, the United Kingdom, Ireland, Jersey
and Guernsey (the Channel Islands), Spain, France, Italy, Germany, Austria,
Switzerland, the Netherlands, Japan, Hong Kong, Singapore, Taiwan, Australia,
Bermuda and South America. The Company also maintains 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. The Company seeks to leverage its products
through available distribution channels and to expand its existing distribution
network.
Expansion of the Company's distribution channels is targeted to those
areas which the Company believes are most likely to generate attractive
marketing or growth opportunities. For example, the Company believes that the
world is moving away from unfunded government-sponsored pension plans toward
more currently-funded retirement planning by employees and individuals. The
Company expects global demographic trends and the need of governments to shrink
budget deficits to continue, enhancing opportunities for the investment
management industry. Retirement and Benefit Services intends to build on
AMVESCAP's track record and experienced staff with expertise in the U.S.
defined contribution marketplace with a view to benefiting from the worldwide
movement toward employee funding of retirement income.
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ALIGNMENT OF INTERESTS OF EMPLOYEES AND SHAREHOLDERS
The Company views its experienced management team as a key factor in
its growth. Although AMVESCAP is a sizable public company, its management
philosophy is entrepreneurial and decentralized, with senior professionals
having significant responsibility and autonomy. The Company believes that its
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. The Company also believes that stock ownership by
management and other employees is an important means of aligning their
interests with those of the shareholders. More than 150 of the Company's key
employees receive a portion of their annual compensation through their
participation in the AMVESCAP Global Stock Plan. See Item 11. "Compensation of
Directors and Officers -- AMVESCAP Global Stock Plan". Additionally, the
Company's employees in North America, the U.K. and Hong Kong were eligible to
participate in the AMVESCAP ShareSave Plan (the "ShareSave Plan"), a stock
purchase plan pursuant to which employees contribute money over a set period of
time, and at the end of the period have the option to purchase a set number of
Ordinary Shares at a price determined at the beginning of the period. As of
December 31, 1998, the Company's employees owned or had the right to acquire
approximately 38% of its capital stock on a diluted basis. The Company believes
that the AMVESCAP Global Stock Plan, the ShareSave Plan and employee share
ownership help align the interests of its employees with the interests of its
shareholders and will help the Company to continue to retain and attract high
caliber employees.
FINANCIAL STRENGTH
To be competitive on a worldwide basis, the Company requires
significant financial resources. The Company believes that its financial
strength allows it to remain independent and focused on one business
- --investment management -- and provides the capital resources necessary to
continue to invest in its operations and to attract and retain experienced
investment professionals. The need to provide services and research globally
and the growing cost of technology creates a competitive advantage for those
with size and financial strength. The Company expects to continue to seek
increased revenues and margin improvement to provide additional capital for
investment in its business.
OPERATING GROUPS
MANAGED PRODUCTS
Managed Products manages and distributes mutual funds and related
products sold to retail and institutional investors primarily within North
America.
The largest unit within Managed Products, AIM, manages and distributes
101 retail and institutional mutual fund portfolios invested in the U.S. and
international markets. The retail funds managed by AIM include equity,
balanced, fixed income and money market funds and reflect a broad range of
investment strategies. The investment objectives of AIM's equity funds range
from aggressive growth to capital appreciation to a combination of growth and
income. Certain of AIM's equity funds target particular market sectors or
non-U.S. markets. AIM's institutional funds include money market funds and
other stable fixed income products and institutional classes of equity funds.
AIM's investment staff is dedicated to implementing carefully designed
investment strategies. AIM uses several styles of equity investing, all of
which are based on a bottom-up stock selection approach rather than a top-down
approach. AIM's 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. Out
of the 44 AIM funds that were rated by MorningStar, Inc. as of February 28,
1999, 27 funds were rated three stars or higher for their overall performance,
including 13 funds
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which were rated four or five stars. MorningStar, Inc. provides a well-known
ratings system for U.S. mutual funds, with the highest rated funds receiving
five stars and the lowest rated funds receiving one star.
AIM distributes its retail funds under The AIM Family of Funds--Registered
Trademark--trademark to retail investors primarily through financial
intermediaries, including major U.S. wire houses, regional broker-dealers, banks
and financial planners. The AIM retail funds are sold under a variety of pricing
structures, including traditional front-end load funds, which provide for the
payment of a sales charge at the time of purchase, and funds that are sold
without a front-end sales charge but which are generally subject to a contingent
deferred sales charge at the time of their redemption. AIM also offers funds
specially designed for separate insurance company accounts. AIM's institutional
funds are sold primarily to banks and their trust departments and other
financial institutions. Customers of AIM's institutional funds included 9 of the
10 largest U.S. banks and 42 of the 50 largest U.S. banks in terms of asset size
at December 31, 1998.
A second major unit of Managed Products, INVESCO Funds Group ("IFG"),
manages and distributes no-load mutual funds under the INVESCO Family of
Funds--Registered Trademark--trademark to retail investors. While AIM and IFG
provide centralized investment management to the AIM funds and INVESCO funds,
respectively, many of the mutual fund portfolios are subadvised by other units
of the Company that have expertise in the specific markets in which such funds
are invested. AIM and IFG also provide advisory services to mutual funds managed
by other business units of the Company. Management believes that this structure
allows the AIM funds and INVESCO funds 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 investments advisers.
The 41 INVESCO funds include a broad array of equity, fixed income and
money market funds, and feature "sector funds" invested in specific industries.
The INVESCO funds are generally sold directly to retail investors without the
payment of a commission at the time of sale, and through financial
intermediaries and selected third party networks. IFG's investment staff uses
an integrated methodology for equity investment that combines top down analysis
and bottom up stock selection to identify the companies they believe have the
highest potential earnings growth. Out of 32 INVESCO funds that were rated by
MorningStar, Inc. as of February 28, 1999, 21 funds were rated three stars or
higher for their overall performance, including 14 funds which were rated four
or five stars.
Each of AIM and IFG maintains an equity trading desk and provides a
full complement of administrative support services, including comprehensive
transfer agent, fund accounting, legal and regulatory compliance support
functions. A facility has been established in Austin, Texas to provide further
mutual fund shareholder service support for the AIM funds and an off-site
location for business recovery purposes.
AIM Funds Management Inc., a Canadian unit of Managed Products, offers
25 retail funds in Canada under the AIM and AIM GT brand names (the "AIM Canada
funds"). The AIM Canada funds include equity, balanced, fixed income and money
market funds and reflect a range of investment strategies. The investment
objectives of the AIM Canada funds range from aggressive growth to capital
appreciation to a combination of growth and income. Certain of AIM Canada's
funds target particular market sectors or non-U.S. markets. The AIM Canada
funds are distributed primarily through financial intermediaries. AIM Funds
Management Inc. provides administrative services to the AIM Canada funds, but
does not provide investment advice to such funds. Other units of the Company,
including AIM and IFG, provide investment advice to the AIM Canada funds.
U.S. INSTITUTIONAL
U.S. Institutional manages separate account portfolios of equity,
balanced, fixed income and real estate investment alternatives through several
business units which provide a broad range of investment management styles for
U.S. institutional clients, including corporate and municipal pension plans,
TaftHartley
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plans, insurance companies and non-profit organizations. The group also manages
separate account portfolios for high net worth individuals and provides
advisory or sub-advisory services to funds offered by other business units of
the Company. Investment portfolios are tailored to the specific objectives and
risk tolerance levels of investors.
U.S. Institutional provides investment advisory services to
institutional separate accounts and investment management and administration
services for a growing "wrap" account business marketed by several national
broker-dealer firms to their retail customers. The "wrap" account program is
specifically designed to meet the needs of individuals and smaller institutions
seeking professional management by offering investors comprehensive investment
management services under a single-fee structure covering all charges,
including investment management, brokerage, custody, record-keeping and
reporting.
U.S. Institutional employs growth, value-oriented and quantitative
approaches to selecting securities for its equity portfolios. U.S.
Institutional's growth-oriented approach seeks to generate superior returns by
investing in equity securities that appear to have significant potential for
growth based upon a blend of fundamental and quantitative factors, proprietary
in-house research and a disciplined investment process. U.S. Institutional's
value-oriented approach seeks to maximize predictability, consistency and
stability of investment returns by selecting equity securities that appear to
be undervalued in light of their issuers' historical performance and financial
condition, while minimizing reliance on uncertain forecasts of future events
and controlling risk with attention to portfolio design. U.S. lnstitutional's
quantitative investment approach uses a sophisticated proprietary system
designed to build portfolios that produce consistent, strong returns by
identifying undervalued securities and diversifying unwanted risk. U.S.
Institutional customizes its growth, value-oriented and quantitative approaches
to meet the varied investment objectives of the Company's diverse client base.
U.S. Institutional manages fixed income securities using quantitative
and stable value approaches. For quantitative fixed income portfolios, the
portfolio manager has primary responsibility to implement buy and sell
decisions within a structured framework, determine appropriate maturities and
quality, and identify individual investment opportunities. These investment
techniques are designed to reduce portfolio volatility while enhancing longer
term returns. U.S. Institutional's stable value approach is designed to return
invested principal and a predictable, fixed amount of investment income while
preserving value and providing liquidity. Portfolio managers seek to construct
low volatility portfolios through the use of ongoing credit analysis, market
intelligence and proprietary asset allocation methodology.
U.S. Institutional also provides opportunities through a global
private capital organization for a broad spectrum of venture capital
investments, including direct investments in entrepreneurial companies,
partnerships and bank loans. Active participation in these areas enables U.S.
Institutional to take advantage of numerous synergies, including enhanced deal
flow, greater access to information and multiple investment perspectives.
In addition, U.S. Institutional provides real estate investment
management services to institutional clients, including institutional separate
account portfolios investing in real estate investment trusts and direct real
estate investments. U.S. Institutional has also designed a "flex" asset
allocation product which combines its equity and fixed income management
disciplines with a process designed to periodically shift assets in favor of
the most attractively valued class of asset.
U.S. Institutional's marketing efforts are coordinated with a view to
enabling the group to take full advantage of opportunities to develop broader
client relationships. The group maintains a centralized client data base to
identify and better coordinate joint marketing opportunities and avoid
duplicative marketing efforts. The marketing staff implements joint marketing
approaches to clients who seek investment management expertise spanning a range
of asset classes.
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INVESCO GLOBAL
INVESCO Global comprises the Company's operations outside North
America, including retail and institutional investment management and related
marketing activities primarily in the United Kingdom, Ireland, the Channel
Islands, Spain, France, Italy, Germany, Austria, Switzerland, the Netherlands,
Japan, Hong Kong, Singapore, Taiwan, Australia, Bermuda and South America.
The Company 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 the
Company's global investment management services. The Company's products and
services are marketed by the group in various European countries, Asia, the
Middle East, South America and the U.S. The group develops its marketing
strategy on a country-by-country basis to better respond to the relevant
competitive environment in each country.
UNITED KINGDOM AND EUROPE. INVESCO Global serves institutional and
individual investors in the U.K. and Continental Europe through business units
in London, Dublin, Jersey, Paris and Frankfurt, and marketing offices in
Guernsey, Spain, Italy, Austria, Switzerland and the Netherlands. INVESCO
Global has also established relationships with substantial financial
institutions in other countries as a base for further expansion in Europe.
INVESCO Global conducts substantial operations in London, where it
manages, distributes and administers U.K. unit trusts (mutual funds), manages
and administers investment trusts (closed-end investment companies) and manages
and distributes personal equity plans, which are tax-advantaged schemes
invested in unit trusts and other managed investment products. The London
operations also manage institutional separate account assets invested in the
United Kingdom and Continental Europe and offshore retail funds distributed
from Jersey and in Continental Europe. Separate units in London are responsible
for the management of investments in Eastern Europe, emerging markets and
global fixed income securities. Another unit manages and administers portfolios
for U.K., Continental European and international private investors. The group
maintains in London a full-service equity trading desk and a treasury desk for
the efficient management of client cash in London.
Units located in Dublin and Jersey offer a range of offshore retail
funds domiciled in Ireland, Jersey and Luxembourg, and provide certain
administrative and shareholder support services to these funds. A unit located
in Paris serves as the base for marketing investment company products in France
through independent brokers, alliances with major financial organizations and
direct sales to institutional investors buying for their own accounts. The
Paris unit has also developed relationships with institutional separate
accounts that are managed from London. A unit located in Frankfurt manages
segregated portfolios and mutual funds for German retail and institutional
investors.
The group conducts operations in Spain, Italy, Austria, Switzerland
and the Netherlands for the sole purpose of marketing products managed by
various units within the group. In other countries, such as Portugal, products
and services are offered through distribution agreements with recognized
financial institutions. The Company believes that its status as an independent
investment manager is helpful in establishing such relationships.
ASIA. Through its operations in Hong Kong, Tokyo, Singapore and
Sydney, INVESCO Global serves institutional and individual investors throughout
Asia, Australia and New Zealand, and clients elsewhere in the world seeking
investment in Asian markets. The group's Tokyo unit focuses on Japanese
investors and client portfolios invested in Japan, and the group's Sydney
office performs a similar function in Australia and New Zealand. The Hong Kong
unit serves client needs in other Asian markets, including Korea, China,
Southeast Asia and the Indian sub-continent. The group maintains offices in
Taiwan and Singapore to coordinate and support the group's marketing efforts in
the region.
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The Asian units provide client service, fund distribution, investment
management and marketing services. Each unit is supported by its own trading
desk operations and all required marketing and administrative support. The Hong
Kong and Tokyo units serve as advisers and sub-advisers to United States mutual
funds and U.K. unit trusts and investment trusts, and other investment products
managed by other business units of the Company. These units actively market the
Company's non-Asian products to their Asian clients.
OTHER. INVESCO Global has developed two joint venture relationships in
South America. The Company has also established a presence in Bermuda to assist
in attracting global mandates for investment management. INVESCO Global's unit
in Atlanta seeks to obtain mandates from large U.S. institutional accounts for
global investment.
RETIREMENT AND BENEFIT SERVICES
In January 1998, the Company formed a fourth operating group,
Retirement and Benefit Services, to coordinate, develop and manage defined
contribution services and related retirement products worldwide. The Company
believes that the new division will be better able to focus the Company's
efforts in this growing area of the business.
The centerpiece of Retirement and Benefit Services is an Atlanta unit
that provides a full range of administrative services to defined contribution
plans, such as 401(k) plans, which represent the most rapidly growing segment
of the U.S. retirement market. These services include custodian services,
record keeping, administration, legal and compliance, and client employee
education and communication services. Investment management is provided
primarily through the sale of shares of funds managed by AIM and IFG, and
interests in collective trust funds managed by various AMVESCAP entities. This
defined contribution plan unit either sells its services on a full service
basis, or it sells investment management services separately to clients who
receive administration services from another provider.
Retirement and Benefit Services also includes Institutional Trust
Company, a specialized trust company which provides custodian and trust
services to retirement accounts, the assets of which are invested in INVESCO or
AIM funds or in collective trust funds established to meet specific investor or
plan needs. The group also includes a financial services division to meet the
needs of retirement plan participants through IRA rollovers utilizing the
Company's fund products. Rounding out the group is an international division to
market retirement and benefit services and products in international markets,
with an initial focus on the United Kingdom and Poland.
The Company's retirement services are distributed through four primary
channels: a direct sales force calling on plan sponsors and consultants,
alliances with other service providers that deliver the Company's investment
products to their service accounts, broker-dealer distribution channels and
strategic partnerships with other service providers.
COMPETITION
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,
financial 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.
The Company 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
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<PAGE> 11
resources, and offer more comprehensive lines of products and services, than
the Company. The recent trend toward consolidation within the investment
management industry has served to increase the strength of a number of the
Company's competitors. Additionally, there are relatively few barriers to entry
by new investment management firms, and the successful efforts of new entrants
into the Company'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 the Company are also seeking to expand
market share in different products and services offered by the Company.
Additionally, the independent financial intermediaries who distribute certain
of the Company's products also distribute numerous competing products,
including products sponsored by the firms that employ such financial
intermediaries.
The Company believes that its recent substantial growth and multiple
channels of distribution will enable it to compete effectively in the
investment management business. The Company also believes 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. The Company believes that it is
well positioned to capitalize on this trend.
REGULATION
As with all investment management companies, the Company'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 government agencies and industry self-regulatory
authorities broad administrative discretion over the activities of the Company
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 the Company's business organizations or their key
personnel, and the imposition of fines and censures. It is also possible that
laws and regulations governing the Company's operations or particular
investment products could be amended or interpreted in a manner that is adverse
to the Company.
The Company conducts substantial business operations in the U.S. where
the securities business, and in particular, the investment management business,
is one of the most highly regulated industries. Various business units of the
Company in the U.S. and elsewhere are registered with the U.S. Securities and
Exchange Commission (the "SEC") as investment advisers under the Investment
Advisers Act of 1940, as amended, which broadly regulates disclosures made to
clients, sets standards for performance measurement and the structure of fees
paid for advisory services, and imposes significant record keeping and
reporting obligations.
Units of Managed Products also manage and distribute shares of
investment companies registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), a statute providing comprehensive regulation of
nearly all aspects of such companies' operations. The 1940 Act governs the
capital and management structure of U.S. registered investment companies,
levels of compensation and methods of distribution of investment company
shares. It also sets strict standards for required record keeping and periodic
reporting to shareholders, and specifies disclosure obligations unique to such
companies. The 1940 Act determines who can serve as directors of investment
companies and imposes on such directors specific duties such as regular reviews
of advisory agreements and distribution arrangements and the appointment of
outside service providers. The exercise of these board responsibilities imposes
much higher levels of corporate accountability on investment companies and
their advisers.
The U.S. securities laws and SEC and National Association of
Securities Dealers, Inc. ("NASD") regulations also govern the Company's U.S.
businesses through the regulation of broker-dealers created to market
securities products and services, and transfer agents established to provide
services to mutual fund shareholders. The Company's U.S. broker-dealers are
subject to minimum net capital requirements and
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<PAGE> 12
regulatory supervisory standards. In addition, certain of the Company's
subsidiaries, including those in the U.S. and U.K., are required by various
regulatory agencies to maintain minimum levels of capital. These and other
similar provisions of applicable law may have the effect of limiting
withdrawals of capital and the payment of dividends by such entities.
In the U.S., officers, directors and employees of subsidiaries of the
Company that are engaged in investment advisory and related activities are
required by federal securities laws to adopt and enforce standards governing
such individuals' personal investment activities, and are otherwise subject to
strict controls designed to identify and reduce potential conflicts of interest
between the interests of such individuals and those of such subsidiaries'
clients.
Many of the Company's U.S. operations are involved in the management
of investment portfolios for corporate and municipal pension funds and, as a
consequence, are subject to regulation by the U.S. Department of Labor under
the Employee Retirement Income Security Act of 1974, as amended, and to various
state and local laws governing the conduct of business with government entities
and government officials.
In the United Kingdom, the Company's principal investment management
businesses are generally regulated by the Investment Management Regulatory
Organisation ("IMRO") and the Personal Investment Authority ("PIA"), with
respect to unit and investment trusts and related personal equity plan
marketing activities. The Company's U.K. private client management business is
regulated by the Securities and Futures Authority ("SFA"). Currently, IMRO, PIA
and SFA are self-regulatory organizations operating under the U.K. Financial
Services Authority; however, under new legislation which is currently being
prepared, their functions will be taken over by the Financial Services
Authority, which will act as an independent regulatory agency similar to the
SEC. These organizations exercise broad discretion over the Company's U.K.
operations and periodically examine these operations to ensure that adequate
compliance procedures and controls are in effect.
The Company's operations elsewhere in the world are regulated by
similar regulatory organizations. Some regulatory authorities, notably the
Securities and Futures Commission in Hong Kong, have entered into agreements
with the SEC and IMRO to conduct joint inspections and share information
concerning regulated entities doing business in multiple locations. Other
regulators who potentially exert a significant impact on the Company's
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 BAK in Germany, the Ontario Securities Commission in
Canada and the financial regulatory authorities in Austria, Luxembourg, Germany
and Jersey. The Company's principal German and Austrian operations are required
by local regulations to have a banking license and thus are also subject to
banking regulations.
To the extent that existing or future regulations affecting the sale
of the Company's products and services or the Company's investment strategies
cause or contribute to reduced sales of the Company's products or impair the
investment performance of the Company's products, the Company's aggregate
assets under management and its revenues might be adversely affected.
EMPLOYEES
As of December 31, 1998, AMVESCAP employed approximately 4,900 people,
of which approximately 77% were located in North America.
ITEM 2. DESCRIPTION OF PROPERTY
The principal executive offices of the Company are located in leased
office space at 11 Devonshire Square, London, EC2M 4YR, England. The Company's
North American executive offices are located in
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<PAGE> 13
leased office space at 1315 Peachtree Street, Atlanta, Georgia 30309. The
Company generally leases space in the locations in which it conducts business.
The Company considers its facilities generally sufficient to serve its
anticipated business needs.
ITEM 3. LEGAL PROCEEDINGS
In the normal course of business, the Company is subject to various
legal proceedings; however, in management's opinion, there are no legal
proceedings pending against the Company or any of its subsidiaries which would
have a material adverse effect on the financial position, results of
operations, or liquidity of the Company.
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<PAGE> 14
ITEM 4. CONTROL OF REGISTRANT
The Company is not directly or indirectly owned or controlled by any
other corporations or by any foreign government. The Company is not aware of
any arrangement, the operation of which might result in a change in the control
of the Company.
The following table discloses, as of March 5, 1999, holdings of
Ordinary Shares by directors and executive officers of the Company and each
owner of more than 10% of the Ordinary Shares of the Company of whom the
Company has received notification:
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING ORDINARY
ORDINARY SHARES(1) SHARES
<S> <C> <C>
Charles W. Brady (2) (3) 4,848,507 *
Charles T. Bauer (2) (3) (5) 47,622,935 7.1%
Sir John Banham 1,000 *
The Hon. Michael D. Benson (3) 67,360 *
Joseph R. Canion 72,394 *
Michael J. Cemo (2) (3) (6) 7,672,639 1.1%
Gary T. Crum (2) (3) (7) 34,223,864 5.1%
A. D. Frazier, Jr. (3) -- *
Robert H. Graham (2) (3) (8) 31,421,221 4.7%
Roberto de Guardiola (4) 2,666,886 *
Hubert L. Harris, Jr. (3) 116,200 *
Bevis Longstreth (9) 70,440 *
Robert F. McCullough (3) 12,000 *
Stephen K. West 97,461 *
Alexander M. White 120,000 *
Total Ordinary Shares owned by
current directors and executive
officers of the Company as a group
(15 individuals) (2) (3) 129,012,907 19.2%
</TABLE>
- ---------
* Less than 1%
(1) For additional information regarding ownership of stock options, see
Item 12. "Options to Purchase Securities From Registrant or
Subsidiaries". Ordinary Shares include shares held as ADSs.
(2) Other than the shares shown as held by Mr. Brady, represents shares
issued to former AIM shareholders in February 1997 in connection with
the AIM Merger. These Ordinary Shares and the Ordinary Shares held by
Mr. Brady are subject to certain restrictions on transfer pursuant to
a transfer restriction agreement (the "Transfer Restriction
Agreement"; and each AIM shareholder party thereto and Mr. Brady, a
"Party") entered into in November 1996 and effective as of February
28, 1997 (the "Effective Time"). With certain exceptions, including
transfers to family members and upon death, Parties 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 10%, 5%, 5% and 20% of Ordinary Shares held at the
Effective Time in the second, third, fourth and fifth years of the
Transfer Restriction Agreement, respectively. Under the Transfer
Restriction Agreement, the Company has a right of first refusal to
purchase Ordinary Shares proposed to be sold by Parties with large
shareholdings. Additionally, Parties may not transfer more than 2.5%
of the Company's voting shares,
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<PAGE> 15
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 on February
28, 2002 for all Parties other than Mr. Brady, whose restrictions
terminate on February 28, 2001. This discussion does not purport to be
complete and is qualified in its entirety by, and should be read in
conjunction with, the Transfer Restriction Agreement, which is filed
as an exhibit to this Form 20-F.
(3) Excludes (a) interests of Messrs. Brady, Bauer, Benson, Cemo, Crum,
Frazier, Graham, Harris and McCullough in the 7,782,738 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 11. "Compensation
of Directors and Officers-- AMVESCAP Global Stock Plan") and the
31,935,136 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 12. "Options to Purchase Securities from
Registrant or Subsidiaries") and (b) interests of Messrs. Brady,
Frazier, Harris and McCullough in the 12,997,064 Ordinary Shares held
by the trustees of the AMVESCAP Employee Stock Ownership Plan, in
which such officers may be deemed to be interested by virtue of their
participation in such plan.
(4) 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.
(5) Includes (a) 1,851,153 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 with Mr. Crum and (c) 558,300 Ordinary Shares owned by a
non-profit corporation of which Mr. Bauer serves as president.
(6) Includes 500,000 Ordinary Shares owned by a non-profit corporation of
which Mr. Cemo serves as an executive officer.
(7) Includes (a) 700,000 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) 211,577 Ordinary Shares, 562,032 Ordinary Shares and
2,270,580 Ordinary Shares owned, respectively, by three trusts of
which Mr. Crum is trustee, and (d) 682,246 Ordinary Shares owned by a
trust of which Mr. Crum is co-trustee with Mr. Bauer's wife.
(8) 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) 442,620 Ordinary
Shares owned by a limited partnership with a trust as its general
partner of which Mr. Graham serves as trustee.
(9) Represents shares held by a limited partnership of which Mr.
Longstreth is a general partner.
Pursuant to the terms of a voting agreement entered into in connection
with the AIM Merger, certain former shareholders of AIM and their spouses and
certain current directors of the Company have agreed to exercise the votes that
they will have as directors and shareholders in such a way as to maintain the
composition of the Company's board of directors, as between representatives
selected by certain parties affiliated with AMVESCAP and representatives
selected by certain parties affiliated with AIM, as it existed at the time of
(and after giving effect to) the AIM Merger. The parties to the voting
agreement have also agreed to vote their shares at any general meeting of the
Company on resolutions (other than resolutions in respect of the election of
members of the board of directors of the Company) in the same proportion as the
votes cast
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<PAGE> 16
by unaffiliated shareholders (primarily, shareholders who are not party to the
voting agreement), provided that any such resolution has been approved by
two-thirds of the members of the Company's board of directors. These
shareholders have also entered into a standstill agreement pursuant to which
they have agreed not to take certain actions that might lead to a change in
control of the Company without the consent of at least two-thirds of all the
members of the Company's board of directors. The Company has received
notification that, as of March 5, 1999, the parties to the voting agreement
beneficially owned an aggregate of 181,314,975 Ordinary Shares, 27.0% of the
total outstanding Ordinary Shares of the Company. The foregoing summary does
not purport to be complete and is qualified in its entirety by, and should be
read in conjunction with, the voting agreement and the standstill agreement,
which are filed as exhibits to this Form 20-F.
ITEM 5. 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 have
been listed on the LSE since 1965 and on the SBF - Paris Bourse since September
16, 1998, and are reported under the symbol "AVZ". The ADSs have been listed
and traded on the NYSE since August 25, 1995, under the symbol "AVZ".
Each ADS represents five Ordinary Shares.
<TABLE>
<CAPTION>
ORDINARY SHARES ADSs(1)
---------------------- ----------------------
HIGH LOW HIGH LOW
------- ------- ------ ------
<S> <C> <C> <C> <C>
1997
First Quarter............... 364.50p 252.00p $29.44 $21.82
Second Quarter.............. 356.50 313.00 29.25 25.63
Third Quarter............... 414.50 357.50 33.75 29.25
Fourth Quarter.............. 525.50 366.50 43.13 31.50
1998
First Quarter............... 667.00p 470.00p $55.00 $38.81
Second Quarter.............. 743.00 584.50 62.25 48.31
Third Quarter............... 730.00 337.75 58.75 29.00
Fourth Quarter.............. 493.75 263.00 41.00 21.56
</TABLE>
- ---------
(1) ADS prices have been adjusted to reflect the one-for-two adjustment to
the Ordinary Share per ADS ratio effected in April 1998.
A total of 671,929,187 Ordinary Shares were issued and outstanding on
March 5, 1999, of which 189,178,902 Ordinary Shares were held of record by
holders in the U.S. (excluding shares held in ADR form) and 21,471,595 Ordinary
Shares were represented by ADSs evidenced by ADRs issued by The Bank of New
York as depositary. On March 5, 1999, the number of holders of record of the
Ordinary Shares was 13,383, the number of holders of record of Ordinary Shares
in the U.S. was 234 and the number of registered holders of the ADSs was 54.
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.
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
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 the Company's operations.
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<PAGE> 17
There are currently no restrictions under the Company's Memorandum and
Articles of Association or under English law which 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.
ITEM 7. TAXATION
The following discussion generally summarizes the principal U.S.
federal income tax and U.K. tax consequences to beneficial owners of the
Ordinary Shares or ADSs (evidenced by ADRs) that are subject to U.S. federal
income tax on worldwide income, regardless of source ("U.S. Holders") and are
not resident or ordinarily resident in the U.K., of the purchase, ownership and
disposition of Ordinary Shares or ADSs. Because this is a general summary,
investors in Ordinary Shares or ADSs who are U.S. Holders are advised to
consult their own tax advisers with respect to the U.S. federal, state and
local tax consequences and U.K. tax consequences of the purchase, ownership and
disposition of Ordinary Shares or ADSs applicable to their particular tax
situations.
The statements of U.S. federal income tax and U.K. tax laws set out
below are based (a) on the laws and conventions in force and as interpreted by
the relevant taxation authorities, as of the date of this Form 20-F, and are
subject to any changes (which may apply retroactively) in U.S. or U.K. law or
in the interpretation thereof by the relevant taxation authorities, or in the
conventions between the U.K. and the U.S. relating to income and capital gains
(the "U.S. Treaty") and estate and gift taxes (the "U.S. Estate Tax Treaty")
occurring after such date and (b) in part, on representations of the Depositary
and on the assumption that each obligation in the amended and restated deposit
agreement, dated as of November 2, 1998, among the Company, the Depositary and
the holders of ADRs issued thereunder (the "Deposit Agreement") and any related
agreement will be performed in accordance with its terms.
This summary does not address the laws of any state or locality or any
government (other than the U.K. and the U.S.). Further, this summary does not
address the tax consequences to special classes of taxpayers that are subject
to special rules, including without limitation, for U.S. tax purposes, (i)
dealers in securities or currencies, (ii) persons that hold their Ordinary
Shares or ADSs as part of a straddle, hedging or conversion transaction, (iii)
persons whose functional currency is other than the U.S. dollar, (iv)
tax-exempt investors, (v) persons that own 10% or more of the voting stock of
the Company, or (vi) persons who hold the Ordinary Shares or ADSs in a manner
which is effectively connected with a permanent establishment in the U.K.
through which such U.S. Holder carries on business, or with a fixed base in the
U.K. from which such U.S. Holder performs independent personal services. Except
to the limited extent discussed below, it does not consider any U.S. tax or
U.K. tax consequences to a person other than a U.S. Holder.
For purposes of the treaties mentioned above and the U.S. Internal
Revenue Code (the "Code"), U.S. Holders will be treated as the owners of the
Ordinary Shares represented by ADSs (evidenced by ADRs). Accordingly, except as
noted below, the U.K. tax and U.S. federal income tax consequences discussed
below apply equally to beneficial owners cf both Ordinary Shares and ADSs that
are U.S. Holders.
TAXATION OF DIVIDENDS
Under U.K. law, no tax is required to be withheld by the Company from
any dividend paid by the Company in respect of Ordinary Shares or ADSs.
DIVIDENDS PAID BEFORE APRIL 6, 1999
The Company is liable to account to the U.K. Inland Revenue for
advance corporation tax ("ACT") at a rate of one-quarter of the dividend paid.
The dividends paid by the Company come with an attached tax credit equal to the
ACT paid. A shareholder's liability to U.K. income tax is calculated on the sum
of the dividend and the tax credit with the tax credit generally available for
offset against the tax liability.
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<PAGE> 18
Under the U.K. Finance Act 1994, a company which is resident in the
U.K. for U.K. tax purposes may elect to pay a dividend as a foreign income
dividend. The Company made this election in relation to all dividends paid in
1996, 1997 and 1998. The consequence of an election to pay a dividend as a
foreign income dividend is that the dividend does not carry a reclaimable tax
credit.
U.S. HOLDERS. The provisions under which a U.S. Holder may reclaim any
part of a tax credit to which it is entitled under the U.S. Treaty have no
application in the case of foreign income dividends because such dividends do
not carry a tax credit. Accordingly, repayments of U.K. tax will not be made in
relation to foreign income dividends.
DIVIDENDS PAID ON OR AFTER APRIL 6, 1999
The foreign income dividend scheme is abolished beginning April 6,
1999, thus all dividends paid on or after this date will carry tax credits.
Additionally, the rate of tax credit for dividends will be reduced to 10% of the
aggregate of the dividend and the tax credit itself (equivalent to one-ninth of
the cash dividend). At the same time, the rate of tax charged on the dividends
will be reduced such that the tax position of a U.K. resident shareholder will
be broadly the same, other than that the tax credits will no longer be repayable
to U.K. resident persons with no tax liability. For example, a U.K. resident
shareholder who is liable to pay income tax at the Schedule F upper rate (32.5%
from April 6, 1999) who receives a dividend of pounds sterling 90 would be
liable to pay pounds sterling 22.50 of tax, i.e., 32.5% of pounds sterling 100
(pounds sterling 90 plus the pounds sterling 10 tax credit) less the pounds
sterling 10 tax credit (one-ninth of the pounds sterling 90 dividend).
U.S. HOLDERS. A U.S. Holder will no longer be able to reclaim any part
of the tax credit related to dividends. Under the terms of the U.S. Treaty,
dividend payments to holders of less than 10% of the voting stock of the
Company will be reduced by a maximum withholding amount of 15% of the total of
the dividend and the accompanying tax credit. For such shareholders the
repayable tax credit may not be reclaimed but the excess of the withholding tax
(15% of the total dividend and the accompanying tax credit) over the tax credit
(one-ninth of the dividend) is not collected and does not reduce the dividend
payable.
Pursuant to the U.S. Treaty, the aggregate of the dividend and the tax
credit shall be treated as a dividend for U.S. tax credit purposes. The U.S.
taxation liability may be reduced by a claim for credit for the U.K.
withholding tax suffered. Since a foreign income dividend does not carry a
reclaimable tax credit, the receipt of a dividend with an accompanying tax
credit should result in a net cash benefit to the U.S. Holder in comparison to
a receipt of a foreign income dividend of the same amount.
OTHER U.S. TAX ISSUES
Dividends on Ordinary Shares or with respect to ADSs (including the
related tax credit amount) will constitute dividends for U.S. federal income tax
purposes to the extent paid out of current or accumulated earnings and profits
of the Company as determined for U.S. federal income tax purposes. Such
dividends will generally not (except for certain 10% corporate shareholders) be
eligible for the dividends received deduction allowed to U.S. corporations. The
amount of dividend income for a U.S. Holder will be the dollar value of the
dividend payable on the date of receipt by the Depositary, regardless of whether
the dividend is converted into dollars. Foreign currency exchange gain or loss,
if any, realized on a sale or other disposition of pounds sterling sterling will
be ordinary income or loss to the U.S. Holder.
Subject to certain limitations, the 15% U.K. withholding tax on
dividends will be treated for U.S. tax purposes as a U.K. withholding tax that
may be claimed as a credit against the U.S. federal income tax liability of the
U.S. Holder. The overall limitation on foreign taxes eligible for credit is
calculated separately with respect to specific classes, or "baskets" of income.
For this purpose, dividends distributed by the Company will generally
constitute "passive income" or, in the case of certain U.S. Holders, "financial
services income".
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<PAGE> 19
Foreign tax credits allowable with respect to each income basket cannot exceed
the U.S. federal income tax otherwise payable with respect to such income.
TAXATION OF CAPITAL GAINS
U.S. Holders of ADSs or Ordinary Shares who are U.S. resident
individuals or U.S. corporations, and who are not resident or ordinarily
resident in the U.K. for U.K. tax purposes, will not be liable for U.K.
taxation on capital gains realized on the disposal of their ADSs or Ordinary
Shares unless the U.S. Holder carries on a trade through a U.K. branch or
agency which constitutes a permanent establishment or fixed base as defined in
the U.S. Treaty and the ADSs or Ordinary Shares are used, held or acquired for,
or for the purposes of, the trade carried on through, that branch or agency.
A U.S. Holder will, upon the sale or exchange of an ADS or Ordinary
Share, generally recognize gain or loss for U.S. federal income tax purposes in
an amount equal to the difference between the amount realized and the U.S.
Holder's tax basis in the ADS or Ordinary Share. Such gain or loss will be
capital gain or loss and will be long term capital gain or loss if the ADS or
Ordinary Share has been held for more than one year on the date of the sale or
exchange. Any gain recognized by a U.S. Holder will generally be treated as
U.S. source income.
Although capital gains of corporations currently are taxed at the same
rates as ordinary income, the distinction between capital gain and ordinary
income or loss is relevant for purposes of, among other things, limitations on
the deductibility of capital losses (i.e., corporations may only deduct capital
losses to the extent of available capital gains). Individuals and certain other
non-corporate taxpayers are subject to U.S. federal income tax at a lower rate
on long term capital gains than on items of ordinary income. Beginning after
December 31, 2000, gains from the sale of an ADS or Ordinary Share by
non-corporate shareholders that has been held for more than five years will
qualify for an additional preferential capital gains rate.
ESTATE AND GIFT TAX/INHERITANCE TAX
Ordinary Shares or ADSs held by an individual who is domiciled for the
purposes of the U.S. Estate Tax Treaty in the U.S. and is not for the purposes
of such treaty a national of the U.K. will not generally be subject to U.K.
inheritance tax on the individual's death or on a lifetime transfer of the
Ordinary Shares or ADSs provided that any applicable U.S. federal gift or
estate tax liability is paid except where the Ordinary Shares or ADSs are
comprised in a settlement (unless, at the time of the settlement, the settlor
was domiciled in the U.S. and was not a national of the U.K.), are part of the
business property of a permanent establishment in the U.K. or are related to a
fixed base in the U.K. of a person providing independent personal services. If
relief from a charge to U.K. inheritance tax is not available under the U.S.
Estate Tax Treaty, U.K. inheritance tax may be charged if the Ordinary Shares
or ADSs comprise part of an individual's estate on death or are the subject of
a gift (including a transfer at less than fair market value). Special rules
apply to trusts. In the unusual case where Ordinary Shares or ADSs are subject
to both U.K. inheritance tax and U.S. federal estate or gift tax, the U.S.
Estate Tax Treaty generally provides for tax paid in the U.K. to be credited
against tax payable 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 the U.S.
Estate Tax Treaty.
INFORMATION REPORTING
In general, U.S. information reporting requirements will apply to
dividends paid in respect of the Ordinary Shares or ADSs or the proceeds
received on the sale, exchange, or redemption of the Ordinary Shares or ADSs
within the U.S. by non-corporate U.S. Holders.
19
<PAGE> 20
U.K. STAMP DUTY AND STAMP DUTY RESERVE TAX
U.K. stamp duty at the rate of pounds sterling 1.50 per pounds
sterling 100 (or part thereof) or stamp duty reserve tax ("SDRT") at the rate
of 1.5% will be payable on the transfer or issue of Ordinary Shares (i) to a
person whose business is or includes the provision of clearance services or the
nominee or agent of such a person or (ii) to a person whose business is or
includes issuing depositary receipts or the nominee or agent of such a person.
This would include transfers to the Depositary for deposit under the Deposit
Agreement. Stamp duty and SDRT are not charged in certain circumstances on
transfers to intermediaries (as defined by the U.K. Finance Act 1986, as
amended). In accordance with the terms of the Deposit Agreement, any tax or
duty payable by the Depositary or the custodian of the Depositary on deposits
of Ordinary Shares will be charged by the Depositary to the transferor or
issuer of the Ordinary Shares. On the transfer or issue of further Ordinary
Shares to the Depositary, U.K. stamp duty or SDRT may be payable by the
Depositary, and under the Deposit Agreement the holders of ADRs representing
such additional Ordinary Shares must pay an amount equal to such duty or tax to
the Depositary.
No U.K. stamp duty will be payable on any transfer of an ADS, provided
that the ADS (and any separate instrument of transfer) remains at all times
outside the U.K. and that the instrument of transfer is not executed in the
U.K. An agreement to transfer ADSs will not give rise to a liability to SDRT. A
transfer from the Depositary to an ADS holder of the underlying Ordinary
Shares, when such ADS holder is not transferring beneficial ownership, will be
subject to U.K. stamp duty at the rate of 50p per transfer. A transfer from the
Depositary directly to a purchaser from an ADS holder will require the
purchaser of such shares to pay ad valorem stamp duty. The current rate of ad
valorem stamp duty on the transfer of shares is 50p per pounds sterling 100
(or part thereof) of the purchase price of the shares.
Except as mentioned above, no U.K. stamp duty or SDRT will be payable
in connection with any transfer of, or agreement to transfer, ADSs. Transfers
of Ordinary Shares (as opposed to ADSs), however, will normally give rise to
stamp duty generally at the rate of 50p per pounds sterling 100 (or part
thereof) of the purchase price. Stamp duty is normally a liability of the
purchaser. An agreement to transfer Ordinary Shares or any interest therein
will normally give rise to a charge to SDRT at the rate of 0.5% of the
consideration for the Ordinary Shares or interest therein unless an instrument
of transfer of the Ordinary Shares is executed in pursuance of the agreement
and the appropriate amount of stamp duty is paid on the transfer. SDRT is in
general payable by the purchaser.
ALL SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE U.K. AND U.S. FEDERAL, STATE AND LOCAL TAX 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.
20
<PAGE> 21
ITEM 8. SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following tables present selected consolidated financial
information for the Company as of and for the five fiscal years ended December
31, 1998. The financial statement information as of and for each of the years
in the five year period ended December 31, 1998, 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.
U.K. GAAP 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
Item 9. "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Summary of Differences Between U.K. GAAP and U.S.
GAAP" and Note 25 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 9. "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1998(1) 1997(2) 1996 1995 1994
---------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER ORDINARY SHARE AND ADS DATA)
<S> <C> <C> <C> <C> <C>
PROFIT AND LOSS DATA:
Amounts in accordance with U.K. GAAP
Revenues.............................. L802,172 L530,659 L236,235 L192,105 L178,587
Operating profit before exceptional
item............................... 236,095 186,086 64,259 48,705 37,617
Exceptional item...................... (48,600) -- -- 700 2,300
Profit before taxation................ 161,478 177,293 65,981 50,425 39,718
Profit for the financial year......... 94,105 117,014 44,995 36,198 30,764
Earnings per Ordinary Share:
basic......................... 15.7p 22.7p 17.7p 14.6p 12.5p
diluted....................... 14.7p 20.8p 16.1p 13.3p 11.6p
Earnings per Ordinary Share:
before exceptional item and
goodwill amortization:
basic......................... 26.0p 22.7p 17.7p 14.3p 11.6p
diluted....................... 24.3p 20.8p 16.1p 13.1p 10.8p
Earnings per ADS (3)..................
basic......................... 78.5p 113.5p 88.5p 73.0p 62.5p
diluted....................... 73.5p 104.0p 80.5p 66.5p 58.0p
Approximate amounts in accordance
with U.S. GAAP
Profit for the financial year......... 44,251 68,953 31,052 23,577 19,944
Earnings per Ordinary Share:
basic......................... 7p 13p 12p 9p 8p
diluted....................... 7p 12p 11p 9p 8p
Earnings per ADS (3)..................
basic......................... 35p 65p 60p 45p 40p
diluted....................... 35p 60p 55p 45p 40p
</TABLE>
L Refers to pounds sterling
21
<PAGE> 22
<TABLE>
<CAPTION>
DECEMBER 31,
1998(1) 1997(2) 1996 1995 1994
--------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Amounts in accordance with U.K.
GAAP
Total Assets ....................... L1,610,815 L420,848 L370,384 L210,555 L202,616
Current maturities of debt.......... 7,195 25,991 132,055 -- --
Long-term debt, excluding current
maturities....................... 686,010 203,598 27,415 34,309 38,792
Capital and Reserves................ 330,970 (21,462) 112,362 94,924 66,914
Approximate amounts in accordance
with U.S. GAAP
Capital and Reserves................ 1,255,106 996,362 139,882 160,924 151,259
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1998(1) 1997(2) 1996 1995 1994
-------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Amounts in accordance with U.K.
GAAP
Cash provided by Operations......... L 159,861 L234,000 L 54,289 L 54,870 L 29,919
EBITDA(4).......................... 309,459 218,689 74,003 59,186 45,007
Approximate amounts in accordance
with U.S. GAAP
EBITDA(4)........................... 281,112 214,625 74,309 60,350 46,925
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------
1998(1) 1997(2) 1996 1995 1994
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Total assets under $275,405 $192,245 $94,483 $83,555 $65,266
management at year end
</TABLE>
- -----------
(1) Includes the results of GT from June 1, 1998, through December 31,
1998. The Company acquired GT on May 29, 1998. For a description of the
GT Acquisition and its impact on the 1998 financial results of the
Company, see Item 9. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 2 to the Consolidated
Financial Statements.
(2) Includes the results of AIM from March 1, 1997, through December 31,
1997. The Company acquired AIM on February 28, 1997. For a description
of this acquisition and its impact on the 1997 financial results of the
Company, see Item 9. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 2 to the Consolidated
Financial Statements.
(3) All per ADS data has been adjusted to reflect the one-for-two
adjustment to the Ordinary Share per ADS ratio in April 1998. One ADS
is equivalent to five Ordinary Shares.
(4) EBITDA consists of profit before taxation and exceptional item and
excluding interest payable, depreciation and amortization charges.
EBITDA is presented because the Company believes that EBITDA may be
useful to investors as an indicator of funds available to the Company,
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 the
Company's operating performance, (ii) cash flows from operating
activities (as determined in accordance with U.K. GAAP or U.S. GAAP)
as a measure
L Refers to pounds sterling
22
<PAGE> 23
of liquidity or (iii) other consolidated profit or cash flow statement
data determined in accordance with U.K. GAAP or U.S. GAAP.
DIVIDENDS
The Company'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 the
Company, and the final dividend is payable after approval of the Company'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 and payment of any future dividends, and the amount thereof, will
be declared or recommended by the Board of Directors of the Company and will
depend upon, among other factors, the Company's earnings, financial condition
and capital requirements at the time such declaration and payment are
considered. See Item 9. "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Capital Resources and Liquidity" for a
discussion of restrictions on the Company's ability to declare dividends.
The following table sets forth the interim, final and total dividends
paid per Ordinary Share in respect of each year indicated, and translated into
U.S. dollars per ADS:
<TABLE>
<CAPTION>
YEAR ENDED PENCE PER ORDINARY SHARE(1) U.S. CENTS PER ADS(1)(2)
-------------------------------------- ---------------------------------------
DECEMBER 31, INTERIM FINAL TOTAL INTERIM FINAL TOTAL
- ------------- ------- ----- ----- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
1994 1.25 3.50(3) 4.75 10.15 27.95(3) 38.10
1995(3) 1.75 4.00 5.75 13.90 31.15 45.05
1996(3) 2.00 4.00 6.00 15.65 33.15 48.80
1997(3) 2.50 4.50 7.00 20.20 36.86 57.06
1998 3.00(3) 5.00 8.00 25.27(3) (4) (4)
</TABLE>
- ---------------------
(1) For information on taxes applicable to dividends, see Item 7.
"Taxation".
(2) Based on Noon Buying Rates 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.
(3) Paid as a foreign income dividend.
(4) The final dividend for 1998 is payable on July 7, 1999, and hence no
currency translation presently can be made.
23
<PAGE> 24
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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. U.K. GAAP 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 25
to the Consolidated Financial Statements.
GENERAL
The Company is one of the world's largest independent investment
management groups. The Company 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. The Company also earns revenues from front-end fees and commissions
related to trading activities.
The Company's operating expenses primarily consist of compensation,
technology and marketing expenses. A significant portion of these expenses are
variable in nature which allows the Company greater flexibility to maintain
costs consistent with revenue streams.
On May 29, 1998, the Company completed the acquisition of GT. The
total consideration payable in connection with the GT Acquisition was pounds
sterling 510.0 million, part of which was paid through the issuance of 42.5
million Ordinary Shares. The cash consideration of pounds sterling 236.2
million for the GT Acquisition was funded through the net proceeds from the
issuance of an aggregate of $650 million of senior unsecured notes due 2003 and
2005 and funds available from existing credit facilities. Transaction costs
associated with the GT Acquisition were capitalized and included in goodwill.
The pounds sterling 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.
In February 1997, the Company completed the acquisition of AIM, which
became a subsidiary of the Company. The total consideration payable in
connection with the AIM Merger was pounds sterling 1.1 billion, part of which
was paid through the issuance of approximately 252.3 million Ordinary Shares
and the grant of options on approximately 37.7 million Ordinary Shares. See
Note 2 to the Consolidated Financial Statements. AIM's results are reflected in
the Consolidated Financial Statements beginning March 1, 1997.
24
<PAGE> 25
During 1998, the Company was organized in four operating groups: (1)
Managed Products, (2) U.S. Institutional, (3) INVESCO Global and (4) Retirement
and Benefit Services. The following is an analysis of the changes in assets
under management by operating group over the last three years.
CHANGES IN ASSETS UNDER MANAGEMENT
<TABLE>
<CAPTION>
MANAGED PRODUCTS U.S. INVESCO RETIREMENT
TOTAL AIM INVESCO INSTITUTIONAL GLOBAL AND BENEFIT
SERVICES
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Assets under management at
December 31, 1995 ................... $ 83,555 $ -- $ 13,639 $ 52,487 $ 14,730 $ 2,699
Market gains ........................ 10,205 -- 2,220 7,025 533 427
Net new (lost) business ............. 46 -- 385 (400) (346) 407
Transfer ............................ -- -- (302) 126 176 --
Foreign currency (1) ................ 677 $ -- -- -- 677 --
--------- --------- --------- --------- --------- ---------
Assets under management at
December 31, 1996 ................... $ 94,483 $ -- $ 15,942 $ 59,238 $ 15,770 $ 3,533
AIM balance at February 28, 1997 .... 67,189 67,189 -- -- -- --
Market gains ........................ 23,448 7,526 3,297 11,314 555 756
Net new (lost) business ............. 7,824 7,096 (43) (2,092) 2,252 611
Transfer ............................ -- 1,599 (1,599) (564) 564 --
Foreign currency (1) ................ (699) (50) 37 -- (686) --
--------- --------- --------- --------- --------- ---------
Assets under management at
December 31, 1997 ................... $ 192,245 $ 83,360 $ 17,634 $ 67,896 $ 18,455 $ 4,900
GT balance at May 29, 1998 .......... 46,762 9,834 427 19,173 17,328 --
Market gains ........................ 26,151 11,426 3,325 9,646 1,132 622
Net new (lost) business ............. 4,642 2,673 1,607 (3,121) 2,721 762
Change in U.S. Money Market Funds ... 4,695 4,404 -- 291 -- --
Foreign currency (1) ................ 910 (177) -- -- 1,087 --
--------- --------- --------- --------- --------- ---------
Assets under management at
December 31, 1998 .............. $ 275,405 $ 111,520 $ 22,993 $ 93,885 $ 40,723 $ 6,284
========= ========= ========= ========= ========= =========
</TABLE>
- ----------------------
(1) 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.
25
<PAGE> 26
RESULTS OF OPERATIONS
The following is a summary of operating profit data by operating group
before goodwill amortization and exceptional item (1):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998(2)
(IN THOUSANDS)
REVENUES EXPENSES OPERATING PROFIT
<S> <C> <C> <C>
Managed Products....................... L488,936 L(290,562) L198,374
U.S. Institutional..................... 143,221 (88,027) 55,194
INVESCO Global......................... 150,511 (118,784) 31,727
Retirement and Benefit Services........ 19,504 (20,630) (1,126)
---------- ---------- ----------
802,172 (518,003) 284,169
Corporate.............................. -- (26,853) (26,853)
---------- ----------- ----------
802,172 (544,856) 257,316
---------- ----------- ----------
Goodwill Amortization.................. -- (21,221) (21,221)
---------- ----------- ----------
L802,172 L(566,077) L236,095
========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997(3)
(IN THOUSANDS)
REVENUES EXPENSES OPERATING PROFIT
<S> <C> <C> <C>
Managed Products....................... L339,361 L(178,914) L160,447
U.S. Institutional..................... 99,939 (54,275) 45,664
INVESCO Global......................... 77,793 (70,533) 7,260
Retirement and Benefit Services........ 13,297 (20,000) (6,703)
---------- ----------- ----------
530,390 (323,722) 206,668
Corporate.............................. 269 (20,851) (20,582)
---------- ----------- ----------
L530,659 L(344,573) L186,086
========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
REVENUES EXPENSES OPERATING PROFIT
<S> <C> <C> <C>
Managed Products....................... L 75,257 L (43,670) L 31,587
U.S. Institutional..................... 90,529 (44,371) 46,158
INVESCO Global......................... 62,135 (57,863) 4,272
Retirement and Benefit Services........ 8,239 (12,221) (3,982)
---------- ---------- ---------
236,160 (158,125) 78,035
Corporate.............................. 75 (13,851) (13,776)
---------- ---------- ---------
L236,235 L(171,976) L64,259
========== ========== =========
</TABLE>
- ----------------------
(1) Segment information for 1996 and 1997 has been reclassified to conform
with the Company's new operating group structure, which became
effective on January 1, 1998.
(2) Includes the results of GT from June 1, 1998 through December 31,
1998. The Company acquired GT on May 29, 1998.
(3) Includes the results of AIM from March 1, 1997 through December 31,
1997. The Company acquired AIM on February 28, 1997.
L Refers to pounds sterling
26
<PAGE> 27
1998 COMPARED TO 1997
INTRODUCTION. The Company completed the GT Acquisition on May 29,
1998. The results of GT have been included in the Company's financial
statements from June 1, 1998. The GT Acquisition added to the Company's
competitive position in the global markets, particularly in Germany, Canada and
Asia, and provided expanded products and distribution capabilities. With this
transaction, AMVESCAP strengthened its position as one of the few independent
global investment management companies.
ASSETS UNDER MANAGEMENT. Assets under management were $275.4 billion
at the end of 1998, including assets $46.8 billion of acquired in the GT
Acquisition. This reflects an increase of 43.3% over the period. Market gains
provided $26.2 billion of the increase in assets under management. Net new
business of $4.6 billion also contributed to the increase.
OPERATING RESULTS. Revenues increased by 51.2% during 1998 due to the
GT Acquisition, market growth and net sales. All operating divisions achieved
record levels of revenues in 1998.
Expenses before exceptional item for the Company increased by 58.1%
over 1997. The majority of this increase was due to increases in staff costs
associated with increased headcount and higher compensation, particularly
performance related compensation. Other operating expenses increased during
1998 as a result of the increased cost of marketing the Company's products,
providing client services and providing technology to support the Company's
businesses. Variable costs accounted for approximately 30.0% of total expenses,
reflecting the Company's ability to control costs in accordance with market
fluctuations.
Profit before tax, goodwill amortization and exceptional item of the
Company increased 30.5% to pounds sterling 231.3 million in 1998 from pounds
sterling 177.3 million in 1997. Earnings per share before goodwill amortization
and exceptional item increased 14.5% to 26.0p for 1998 from 22.7p for 1997.
Diluted earnings per share before goodwill amortization and exceptional item
increased 16.8% to 24.3p for 1998 from 20.8p for 1997.
The businesses of GT have been reorganized, integrated and merged into
AMVESCAP business units. The operating results and cash flows of the AMVESCAP
business units do not separately segregate the former GT operations. The cost of
this integration program is pounds sterling 48.6 million, which was recorded as
an exceptional item in 1998. Integration costs include staff retention and
redundancy payments and expenses associated with terminating lease arrangements
for excess office space. The integration is expected to take up to 18 months
from June 1998, with the major activities to be completed by June 1999.
Transaction costs associated with the GT Acquisition were capitalized and
included in goodwill. The amortization of goodwill arising from the GT
Acquisition reduced the Company's earnings for 1998 by pounds sterling 21.2
million (3.5p per share).
The Company has significant operations in the U.S. with earnings
denominated in U.S. dollars. Accordingly, the results of the Company can be
materially affected by the U.S. dollar to pounds sterling exchange rate. It is
not the Company's policy to hedge the translation of profit from U.S.
subsidiaries; therefore, changes in exchange rates can materially affect the
results of the Company. The average U.S. dollar to pounds sterling exchange rate
in 1998 was$1.66 per pounds sterling 1.00, compared with $1.64 per pounds
sterling 1.00 in 1997.
MANAGED PRODUCTS. Revenues and operating profits for Managed Products
reached record levels in 1998. Revenues increased 44.0% primarily due to the GT
Global acquisition, market appreciation and net sales. AIM and IFG had gross
retail sales of $16.2 billion and $10.9 billion, respectively, during 1998 and
both units had positive net flows during the year. Operating profit increased
23.6% during 1998.
U.S. INSTITUTIONAL. The group produced record results for 1998.
Revenues for U.S. Institutional increased 43.3% primarily due to increases in
assets under management. Assets under management increased by $26.0 billion
primarily due to the GT Acquisition and market appreciation, which were
partially
27
<PAGE> 28
offset by a net loss of business. While the group continues to experience a
loss of assets caused by the shift to index products from actively managed
accounts, the flow from active to passive management has declined and the group
continues to rank among the largest active-only asset managers in the U.S.
based on assets under management. Marketing activity by U.S. Institutional
produced record levels of new business and 130 new clients during 1998. The
acquisition of GT enhanced the group's product lines and provided other
synergies for its business. Operating profit for U.S. Institutional increased
20.8% during 1998.
INVESCO GLOBAL. INVESCO Global's assets under management increased
primarily as a result of the GT Acquisition, which provided increased market
positions in several important areas and added over $17 billion in new assets
under management. This asset growth resulted in 93.5% growth in INVESCO Global's
revenues during 1998. Operating profits of INVESCO Global increased to pounds
sterling 31.7 million during 1998, reaching an operating profit margin of 21.1%
for 1998. The Asian markets continued to be very volatile during 1998; however,
the group's retail and institutional new business activity remained sound. The
group's retail sales, particularly in France, were favorable compared to prior
year sales levels.
RETIREMENT AND BENEFIT SERVICES. Retirement and Benefit Services
generated over $1.3 billion in net new business for various units of AMVESCAP
during 1998 and was responsible for over $6.2 billion in assets under
management for all distribution channels. The group services 350 separate
retirement plans with approximately 260,000 plan participants.
CORPORATE. Corporate expenses increased during 1998 due to
expenditures in Company-wide technology initiatives, development efforts in
Continental Europe and international defined contribution activities.
TAXATION. The effective income tax rate for the Company on profit
after goodwill amortization and exceptional item increased to 41.7% in 1998
from 34% in 1997. The increase in the tax rate was due to goodwill amortization
for financial statement purposes, which is not deductible for tax purposes, and
the Company's inability to recognize deferred tax assets on a significant
portion of the exceptional item. Both the goodwill amortization and the
exceptional item resulted from the GT Acquisition.
After adjusting for goodwill amortization and exceptional item, the
Company's effective income tax rate on ordinary profit (profit before goodwill
amortization and exceptional item) decreased to 32.5% in 1998 from 34% in 1997.
The decrease in the tax rate was primarily due to the Company's recognition of
benefits related to the exercise of stock options and the recognition of
certain deferred tax assets.
The majority of the Company's 1998 profits arose in the U.S. and are
taxed at rates that are higher than in the U.K. The current federal income tax
rate in the U.S. is 35% compared to the U.K. tax rate of 31%.
1997 COMPARED TO 1996
INTRODUCTION. Equity markets in Europe and the U.S. recorded another
year of strong growth. This was partially offset by turmoil in the Asian
markets during the fourth quarter of 1997. For AMVESCAP, this volatility, while
a concern, did not materially impact the Company's results due to the
significant influence of the U.S. markets on the operations of the Company. The
general market appreciation in the U.S. and Europe, along with the completion
of the AIM Merger combined to produce record results for the Company in 1997.
ASSETS UNDER MANAGEMENT. Assets under management were $192 billion at
the end of 1997, including assets acquired during the AIM Merger. This reflects
an increase of 103% over the period. Excluding acquired assets, market gains
provided $23 billion of the increase in assets under management.
Net new business of $8 billion also contributed to the increase.
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<PAGE> 29
OPERATING RESULTS. Revenues increased by 125%, 109% of which was due
to the AIM Merger. Growth in revenues was achieved across all operating
divisions, particularly in the U.S. due to strong market growth and net sales.
Expenses for the Company increased by 100% over 1996; when the impact
of the AIM Merger was removed, the underlying increase in expenses was 25%. The
majority of this increase was the result of higher staff costs in the form of
both increased headcount and higher compensation, particularly performance
related compensation. Variable costs accounted for 32% of total expenses, up
from 21% in 1996, which gave the Company greater flexibility to maintain costs
consistent with revenue streams. All AIM Merger transaction costs were
capitalized and included in goodwill and written off to reserves.
Operating profit of the Company increased 190% from 1996 primarily due
to the AIM Merger. The AIM Merger further increased the Company's dependence on
U.S.-based earnings. The average U.S. dollar to pounds sterling exchange rate in
1997 was $1.64 per pounds sterling l.00, compared with $1.56 per pounds sterling
1.00 in 1996. If the rate used in 1996 had remained in effect during 1997,
operating profit would have been approximately pounds sterling 10 million higher
than that recorded based on actual rates.
MANAGED PRODUCTS. Assets under management of Managed Products
increased by $85 billion in 1997, of which $83 billion relates to the AIM
Merger. Net sales at AIM from March 1, 1997 of over $7 billion along with
market appreciation resulted in an increase in AIM's assets under management of
$16 billion or 24%. The inclusion of AIM contributed 83% of the operating
profit of Managed Products in 1997. INVESCO experienced an 8% decline in
operating profit, primarily the result of the negative effect of the change in
the U.S. dollar to pounds sterling exchange rate from the prior year. INVESCO's
revenues increased 14% from 1996 due to the market's positive impact on assets
under management during the year and net sales of $1 billion. INVESCO's
expenses increased 25% during the year from greater staff and technology costs.
Significant investments in technology were made in both the retail business and
the defined contribution retirement business, primarily related to the
conversion to new or enhanced computer systems which are necessary to continue
to provide a high level of client service.
U.S. INSTITUTIONAL. Assets under management of U.S. Institutional
increased by $9 billion, primarily the result of market appreciation partially
offset by a net loss of business. Although U.S. Institutional earned higher
revenues in 1997, it experienced a loss of assets under management during 1997
as some large pension funds shifted assets from actively managed core-value
equity accounts to lower fee index accounts. The Company made adjustments
throughout 1997 to deal with this shift -- both in terms of product enhancement
and market segmentation. Revenues for U.S. Institutional increased 10% from
1996. Expenses increased 22% during the year, largely the result of increases
in headcount and associated staff costs. Operating profit for U.S.
Institutional was also adversely affected by the weakening of the U.S. dollar
to pounds sterling exchange rate during the year. After adjusting for the
exchange rate impact, U.S. Institutional operating profit increased 4% over
1996.
INVESCO GLOBAL. INVESCO Global's assets under management grew through
net retail sales and new institutional business by $3 billion, an increase of
17% from 1996. This asset growth and the continued strength of the European
markets in 1997 resulted in 25% growth in INVESCO Global's revenues. Expenses
increased 22% from 1996, as additional employees joined the group resulting in
increased staff costs, and as new products were developed and launched. This
significant growth during the year resulted in a 70% increase in INVESCO
Global's operating profit.
RETIREMENT AND BENEFIT SERVICES. Assets under management of Retirement
and Benefit Services increased to $4.9 billion at December 31, 1997, from $3.5
billion at December 31, 1996, due to market gains and net new business.
Revenues increased 61% from 1996 as a result of the increases in assets under
management. At December 31, 1997, Retirement and Benefit Services was
responsible for 240 separate retirement plans with approximately 175,000 plan
participants.
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TAXATION. The effective income tax rate for the Company on ordinary
profit increased to 34% in 1997 from 32% in 1996. The majority of the Company's
1996 and 1997 profits arose in the U.S. and were taxed at rates that are higher
than those in the U.K. Company profits arising in the U.S. increased
significantly during 1997 as a result of the AIM Merger, which resulted in an
increase in the amount of profits taxed at the higher U.S. income tax rate.
CAPITAL RESOURCES AND LIQUIDITY
CASH FLOWS
Operations provided pounds sterling 159.9 million in cash flows in 1998,
compared to pounds sterling 234.0 million in 1997. Financing activities provided
pounds sterling 175.7 million during the year, including pounds sterling 395.2
million in net proceeds from the issue of $650 million in Notes (defined below)
and pounds sterling 72.9 million in net draws under the Facility (defined
below), offset by pounds sterling 297.5 million used to repay debt, including
(i) $130.3 million aggregate principal amount of the senior notes of INVESCO
(NY) Asset Management, Inc., a subsidiary of the Company, (ii) all of the
outstanding unsecured notes of AIM, and (iii) other debt assumed in connection
with the GT Acquisition. The majority of this cash flow was used to fund the
cash component of the GT Acquisition.
The Company generated pounds sterling 309.5 million of earnings before
interest, taxes, depreciation, amortization and exceptional item ("EBITDA") in
1998, an increase of pounds sterling 90.8 million from the prior year. During
1998, the Company paid pounds sterling 44.4 million in dividends and pounds
sterling 54.6 million for fixed assets expenditures, principally for technology.
The Company's operations continue to be financed from share capital,
retained profits and borrowings. The Company anticipates that operating
activities in 1999 will continue to provide sufficient cash flows to meet its
financial commitments and to capitalize on opportunities for business
expansion. The Company plans to use the cash remaining from operations after
satisfying its business reinvestment needs to reduce debt levels in 1999.
COMPANY BORROWINGS
At December 31, 1998, the Company's total long-term debt amounted to pounds
sterling 693.2 million, an increase of pounds sterling 463.6 million from the
prior year. This increase includes the issuance of $650 million pounds sterling
398 million) of new fixed rate senior debt due in 2003 and 2005 (the "Notes")
and debt assumed in the GT Acquisition, the majority of which was repaid prior
to December 31, 1998. Net debt at December 31, 1998, amounted to pounds sterling
622.7 million.
During 1997, the Company entered into a five year $700 million credit
facility with a group of 17 international banks (the "Facility"). At December
31, 1998, pounds sterling 271.3 million was drawn under the Facility.
DIVIDENDS
The Company's Board of Directors has recommended a final dividend of 5p per
share, resulting in a total dividend of 8p in 1998 versus 7p in 1997. The total
dividend for 1998 represents an increase of 14% over the total dividend for
1997. The total dividend declared for 1998 increased 28% to pounds sterling 50.6
million from 1997 to 1998, primarily as a result of the issuance of 42.5 million
Ordinary Shares in connection with the GT Acquisition. 1998 was the sixth
consecutive year the Company's dividend was increased.
Under the Companies Act 1985 of Great Britain, as amended (the "Companies
Act"), the Company's ability to declare dividends is limited to the amount of
its distributable profits (the current and retained amounts of the Company's
profit and loss account) on an unconsolidated basis. At December 31, 1998, the
amount available for dividends was pounds sterling 27.0 million after accrual of
the recommended final dividend for 1998. Furthermore, the Company's $700 million
revolving credit agreement places certain restrictions on the
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<PAGE> 31
Company's ability to pay dividends, as described in Note 17 to the Consolidated
Financial Statements. Each of these restrictions could impact the ability of
the subsidiaries to pay dividends to the Company and the Company'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 the Company's ability to
pay dividends.
The Company believes that its cash flow from operations and credit
facilities, and its ability to obtain alternative sources of financing, will
enable the Company to meet debt and other obligations as they come due and
anticipated future capital requirements.
SUMMARY OF DIFFERENCES BETWEEN U.K. GAAP AND U.S. GAAP
The financial statements maintained by the Company in England, its
jurisdiction of incorporation, are prepared in accordance with U.K. GAAP. U.K.
GAAP differs in certain material respects from U.S. GAAP. The principal
differences between U.K. GAAP and U.S. GAAP, as applied to the Company, relate
to the historical elimination of goodwill and other intangibles against
reserves and the related treatment of the deferred taxes, shares held by share
option trusts, proposed dividend liabilities and loans of employee stock
ownership plans. See Note 25 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 new accounting standards for goodwill,
impairment of fixed assets, earnings per share and financial instruments
appears in the Notes to the Consolidated Financial Statements.
YEAR 2000 COMPUTER ISSUES
YEAR 2000 ISSUE
Many computer systems in use today were designed and developed using
two digits, rather than four, to specify the year. As a result, such systems
will recognize the year 2000 as "00", causing many computer applications to
fail or to create erroneous results. The Company utilizes software and related
computer technologies essential to its operations that will be affected by this
year 2000 issue (the "Issue"). The Company has formed a project team to assess
its vulnerability to the Issue and to take action to mitigate year 2000 risks.
Progress on this project (the "Project") is reported directly to the Company's
Board of Directors on a regular basis.
YEAR 2000 COMPLIANCE PROJECT
The Company and its subsidiaries are in various stages of reviewing,
testing and making software and hardware repairs and/or upgrades to those
systems and programs they believe will be impacted by the Issue. The Project
consists of five phases and addresses all automated processes, including
hardware.
AWARENESS/ASSESSMENT. During this phase, the Company educated
personnel regarding the Issue, defined and approved an approach to the Issue,
and dedicated resources to the Project. The Company completed an inventory of
its internal systems and third party systems on which it relies. The majority
of applications used by the Company are licensed from third party vendors. The
Company classified each of its applications as either "mission-critical" or
"non-mission critical." Approximately 3% of the more than 5,000 technologies
identified on the inventory are deemed to be "mission critical" applications.
This initial phase of the Project has been completed.
ANALYSIS. This phase analyzed the inventoried applications to
determine year 2000 readiness. The analysis involved (i) sending inquiry
letters to third party vendors, (ii) performing year 2000 readiness tests on
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<PAGE> 32
applications developed internally, and (iii) developing remediation,
replacement and upgrade plans for those applications that were not deemed year
2000 compliant. This phase has been substantially completed, except to the
extent that follow-up inquiries are being sent to certain third party vendors.
REMEDIATION. During the third phase, software and hardware not deemed
year 2000 compliant are being corrected or replaced. The Company anticipates
that substantially all of the mission critical software applications, a
majority of non-mission critical applications, and hardware in use will be year
2000 complaint by June 30, 1999.
TESTING. This phase includes internal testing, point-to-point testing
and industry-wide testing (where available). The Company is generally testing
applications in order of criticality to the Company's businesses. Testing will
continue throughout 1999.
IMPLEMENTATION. During the final phase, applications that have been
tested and determined to be year 2000 compliant are installed and introduced
into normal business operations of the Company. The Company anticipates that
substantially all of the mission critical applications and a majority of the
non-mission critical applications will be installed and introduced into normal
business operations by June 30, 1999.
COSTS
The Company incurred expenses related to the Project of approximately
pounds sterling 250,000 and pounds sterling 2.2 million, respectively, during
1997 and 1998. The Company expects to incur Project expenses of approximately
pounds sterling 2.5 million in 1999. These amounts include costs for third party
consultants, and the costs of remediating and replacing non-year 2000 compliant
software and hardware. The Company does not separately track payroll costs and
other internal costs incurred in connection with the Project. While the Company
anticipates that its expenditures and efforts are appropriate, complications as
yet unidentified in internal or external applications related to the year 2000
in general may trigger significantly greater expenses or losses.
CONTINGENCY PLANS
The Company is developing written year 2000 contingency plans based on
existing business continuity plans, which will address possible failures of
mission critical processes and other risks. Additionally, a detailed plan will
be developed for a period preceding and following December 31, 1999, which will
detail crisis management, contingency and back-up procedures to address certain
possible internal or external problems resulting from the Issue. The target
date for substantial completion of contingency planning and validation of such
contingency planning is June 30, 1999; however, the Company will revise its
contingency plans as new risks become apparent.
RISKS
The Issue presents a number of other risks and uncertainties that
could affect the Company, including utilities failures, competition for
personnel skilled in the resolution of the Issue, and the nature of government
responses to the Issue, among others. Non-mission critical systems could
experience year 2000 compliance problems despite representations from third
parties regarding the year 2000 readiness of technologies used by the Company
and the testing of such technologies by the Company.
The Company is heavily dependent upon a complex worldwide network of
third party systems that contain date fields, including data feeds to trading
systems, securities transfer agent operations and stock markets. The failure of
third party organizations to resolve their own processing problems with respect
to the Issue in a timely manner could have a material adverse effect on the
Company's businesses.
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While the Company generally continues to believe that the Issue will
not have a material impact on its business, financial condition or results of
operations, it remains uncertain whether or to what extent the Company may be
affected. The Company believes that all necessary actions are or will be taken
internally to mitigate the impact of the Issue on its systems and that the
probability of significant year 2000 problems in 1999 and thereafter for
internal technologies is low; however, no assurance can be given that the
Company's contingency plans will avoid all problems in the event of the failure
of certain systems.
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
This report includes, and documents incorporated by reference herein
and public filings and oral and written statements by the Company 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 the
Company'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 the Company's operations,
earnings, industry conditions, assets under management, demand and pricing for
the Company's products and other aspects of its business (a) under " -- Results
of Operations, " -- Capital Resources and Liquidity", "-- New Accounting
Standards" and " -- Year 2000 Computer Issues" above, (b) under Item 1.
"Description of Business --Business Strategy", and " -- Competition", (c) under
Item 9A. "Quantitative and Qualitative Disclosures about Market Risk," and (d)
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 the Company makes such
statements based on assumptions which it believes to be reasonable, there can
be no assurance that actual results will not differ materially from the
Company's expectations. Many of the factors that will determine these results
are beyond the Company's ability to control or predict. The Company 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.
The Company 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 the Company 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 the
Company'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 the Company invests or does business; (5) enactment of
adverse state, federal or foreign legislation or changes in government policy
or regulation (including accounting standards) affecting the Company'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 the Company 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 the Company's products; (12) the ability of the
Company to attract and retain key personnel; (13) the investment performance of
the Company's investment products and the ability of the Company to retain its
accounts; and (14) the ability of the Company to successfully acquire and
integrate other companies into its operations and the extent to which the
Company can realize anticipated cost savings and synergies.
ITEM 9A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company 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;
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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.
The Company 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 the Company's processing
customer transactions primarily arise as a result of the Company 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 counter party risk. These risks are managed in
accordance with limits established by Company management and applicable
regulations.
Trading in financial instruments for customer related transactions
only occurs in the Company'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
client 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 the Company.
At December 31, 1998, 57% of the Company's borrowings had an interest
rate that was fixed for an average period of 5.5 years. The remainder of the
Company's borrowings had a floating rate.
See Note 24 to the Consolidated Financial Statements for quantitative
disclosures about market risk.
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ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT
The directors and executive officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE* POSITION*
---- --- --------
<S> <C> <C>
Charles W. Brady 63 Director, Executive Chairman, Chief Executive Officer
Charles T. Bauer 80 Director, Executive Vice Chairman
Sir John Banham 58 Non-Executive Director
The Hon. Michael D. Benson 55 Director, Chief Executive Officer, INVESCO Global
Joseph R. Canion 54 Non-Executive Director
Michael J. Cemo 53 Director
Gary T. Crum 51 Director
A.D. Frazier, Jr. 54 Director, Chief Executive Officer, U.S. Institutional
Robert H. Graham 52 Director, Chief Executive Officer, Managed Products
Roberto de Guardiola 53 Non-Executive Director
Hubert L. Harris, Jr. 55 Director, Chief Executive Officer, Retirement and
Benefit Services
Bevis Longstreth 65 Non-Executive Director
Robert F. McCullough 56 Director, Chief Financial Officer
Stephen K. West 70 Non-Executive Director
Alexander M. White 65 Non-Executive Director
</TABLE>
- ------------------------
* All ages are as of March 5, 1999, and the positions shown are those
currently held by the foregoing individuals.
CHARLES W. BRADY. Mr. Brady has served as Executive Chairman of the
Board of Directors since 1993 and Chief Executive Officer of the Company since
1992. He has served as a Director of the Company since 1986. Mr. Brady was a
founding partner of INVESCO Capital Management Inc. He began his investment
career in 1959, graduating with a B.S. from the Georgia Institute of
Technology, and attended the Advanced Management School of Harvard University.
He is also a member of the Atlanta Society of Financial Analysts.
CHARLES T. BAUER. Mr. Bauer has served as a Director and Vice Chairman
of the Company's Board of Directors since February 1997. Mr. Bauer is Chairman
of AIM, which he co-founded in 1976. He has spent his entire professional
career in the investment business. Mr. Bauer holds an A.B. from Harvard
University and an M.B.A. from New York University. He has served as Chairman of
the American Insurance Association Investments Committee, as a Board Member of
the Investment Company Institute, and as a Trustee of the Institute of
Chartered Financial Analysts, Inc.
SIR JOHN BANHAM. Mr. Banham has served as a Director of the Company
since January 1999. He is Chairman of Tarmac PLC, Kingfisher PLC and ECI
Ventures Group, a provider of venture capital for mid-market management
buyouts. He was Director General of the Confederation of British Industry from
1987 to 1992, a Director of National Power from 1992 to 1998, and a Director of
National Westminister Bank from 1992 to 1998. He is a graduate of Cambridge
University and has been awarded honorary doctorates by four leading U.K.
universities.
THE HON. MICHAEL D. BENSON. Mr. Benson has served as a Director of the
Company since February 1995. He has served as Chief Executive Officer of
INVESCO Global since 1996. He served as Chief Executive Officer of the
Company's Asian region from 1995 to 1996. He started his career with the
stockbroking 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. Between 1985
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<PAGE> 36
and 1992, he 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. Mr. Canion has been a Director of the Company since
February 1997. He is also Joint Chairman of the Remuneration Committee. He has
been Chairman of Insource Technology Corporation, a Houston-based business and
technology management company, since 1992. He was co-founder and, from 1982 to
1991, Chief Executive Officer, President and a Director of Compaq Computer
Corporation. He was a director of AIM from 1991 through February 1997, when the
AIM Merger was completed.
MICHAEL J. CEMO. Mr. Cemo has served as a Director of the Company
since February 1997. He is President of A I M Distributors, Inc. and a Senior
Vice President of AIM. Mr. Cemo has been in the investment business since 1971.
He joined AIM in 1988. Mr. Cemo holds a B.S. in economics from the University
of Houston. He is a member of the Investment Company lnstitute's sales force
marketing committee.
GARY T. CRUM. Mr. Crum has served as a Director of the Company since
February 1997. He was co-founder of AIM and serves as a Senior 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 and a member of
AIM's Investment Policy Committee. Mr. Crum has been in the investment business
since 1972. He holds a B.B.A. from Southern Methodist University and an M.B.A.
from the University of Texas at Austin.
A.D. FRAZIER, JR. Mr. Frazier has served as a Director of the Company
since 1996. He has served as Chief Executive Officer of U.S. Institutional
since 1997. Prior to joining the Company, Mr. Frazier was the Chief Operating
Officer of the Atlanta Committee for the Olympic Games, and before joining the
Atlanta Committee in 1991, Mr. Frazier was Executive Vice President in charge
of the North American Banking Group of the First Chicago Corporation and First
National Bank of Chicago. He received a B.A. and a J.D. from the University of
North Carolina at Chapel Hill. He was admitted to the North Carolina Bar in
1969 and attended Harvard's Advanced Management Programme in 1981.
ROBERT H. GRAHAM. Mr. Graham has served as a Director of the Company,
and as Chief Executive Officer of Managed Products, since February 1997. Mr.
Graham is President and Chief Executive Officer of AIM, which he co-founded in
1976. He holds a B.S. and an M.S. in electrical engineering and an M.B.A. in
finance from the University of Texas at Austin. Mr. Graham has been in the
investment business since 1972. He is a member of the Board of Governors and
Executive Committee of the Investment Company Institute and the Board of
Directors and Executive Committee of the ICI Mutual Insurance Company.
ROBERTO DE GUARDIOLA. Mr. de Guardiola has served as a Director of the
Company since February 1997. Mr. de Guardiola is a Managing Director of Putnam,
Lovell, de Guardiola & Thornton, a New York based investment banking firm which
specializes in the investment management industry. Mr. de Guardiola holds a
B.S. in Economics and an M.B.A. from the Wharton School of the University of
Pennsylvania.
HUBERT L. HARRIS, JR. Mr. Harris has served as a Director of the
Company since May 1998. Mr. Harris has served as Chief Executive Officer of
Retirement and Benefit Services since January 1998 and as Chairman of INVESCO
Services, Inc. since May 1996. He also served as a Director of the Company from
1993 to February 1997. Mr. Harris received a B.S. from Georgia Institute of
Technology and an M.B.A. from Georgia State University. Mr. Harris served as
Assistant Director of Office Management and Budget in President Carter's
administration and has served as President and Executive Director of the
International Association for Financial Planning.
BEVIS LONGSTRETH. Mr. Longstreth has served as a Director of the
Company since 1993. He is also Joint Chairman of the Audit Committee. Mr
Longstreth, a graduate of Princeton University and Harvard Law
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School, is of counsel at Debevoise & Plimpton, a New York based law firm, where
he was a partner from 1984 through 1997, and is an adjunct professor at
Columbia Law School. He was formerly a Commissioner of the SEC and 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, a
book on law reform published by Oxford University Press.
ROBERT F. MCCULLOUGH. Mr. McCullough has served as a Director and
Chief Financial Officer of the Company since 1996. Mr. McCullough joined the
Company in 1996 from Arthur Andersen where he practiced as an accountant in New
York from 1964 until 1987, becoming a partner in 1973. In 1987, he moved to
become a Managing Partner of Arthur Andersen's Atlanta office. He is a graduate
of the University of Texas at Austin and is a Certified Public Accountant. He
is a member of the American Institute of Certified Public Accountants and the
Georgia Society of Certified Public Accountants.
STEPHEN K. WEST. Mr. West has served as a Director of the Company
since February 1997. He is also Joint Chairman of the Audit Committee. Mr. West
was a Director of AIM from 1994 through February 1997, when the AIM Merger was
completed. He has been a Partner of Sullivan & Cromwell, a New York City law
firm, since 1964 and is a graduate of Yale University and the Harvard Law
School.
ALEXANDER M. WHITE. Mr. White has served as a Director of the Company
since 1992. He is also Joint Chairman of the Remuneration Committee. Mr. White
has had a distinguished career in the financial services community, having been
associated with Merrill Lynch, White Weld & Co. and most recently as a senior
investment banker with James D. Wolfensohn, Inc. Mr. White is a graduate of
Harvard College and Harvard Business School.
Pursuant to the terms of the voting agreement (referred to under Item
4. "Control of Registrant") entered into in connection with the AIM Merger,
certain former shareholders of AIM and their spouses and certain current
directors of the Company have agreed to exercise the votes that they will have
as directors and shareholders in such a way as to maintain the composition of
the Company's board of directors, as between representatives selected by
certain parties affiliated with AMVESCAP and representatives selected by
certain parties affiliated with AIM, as it existed at the time of (and after
giving effect to) the AIM Merger. For additional information regarding the
voting agreement, see Item 4. "Control of Registrant".
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ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
In 1998, the aggregate compensation of all directors of the Company (16
persons, including two directors who resigned in 1998) paid or accrued was
pounds sterling 13.6 million. In addition to this amount, pounds sterling
190,000 was set aside or accrued by the Company or its subsidiaries to provide
pension or retirement benefits to the Company's directors.
The remuneration of the executive chairman and directors of the
Company is set forth in the following table:
<TABLE>
<CAPTION>
SALARY BONUS(1) BENEFITS TOTAL
-----------------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997 1998 1997
L'000 L'000 L'000 L'000 L'000 L'000 L'000 L'000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EXECUTIVE CHAIRMAN:
Charles W. Brady 335 338 2,412 2,134 14 13 2,761 2,485
EXECUTIVE DIRECTORS:
Charles T. Bauer (2) 271 279 1,206 1,372 1 1 1,478 1,652
The Hon. Michael D. Benson 245 230 845 536 1 2 1,091 768
Michael J. Cemo (2) 166 168 1,439 1,470 1 1 1,606 1,639
Gary T. Crum (2) 241 193 844 915 1 1 1,086 1,109
A.D. Frazier, Jr 242 244 724 732 11 12 977 988
Robert H. Graham (2) 302 300 1,809 1,524 1 1 2,112 1,825
Hubert L. Harris Jr. (3) 260 262 603 610 12 12 875 884
Robert F. McCullough 242 183 724 732 8 10 974 925
Wendell M. Starke (4) 102 307 302 915 4 13 408 1,235
NON-EXECUTIVE DIRECTORS:(5)
Joseph R. Canion (2) 36 30 -- -- -- -- 36 30
Roberto de Guardiola (2) 36 30 -- -- -- -- 36 30
Bevis Longstreth 36 32 -- -- -- -- 36 32
Sir William R. Stuttaford (4) 8 40 -- -- -- -- 8 40
Stephen K. West (2) 36 30 -- -- -- -- 36 30
Alexander M. White 36 32 -- -- -- -- 36 32
Ian R. Wilson(6) -- 30 -- -- -- -- -- 30
===== ===== ====== ====== ===== ===== ====== ======
2,594 2,728 10,908 10,940 54 66 13,556 13,734
</TABLE>
- -------------
(1) A portion of the sums included under Bonus (20% for 1998 and 1997) was
paid into the AMVESCAP Global Stock Plan and used to purchase Ordinary
Shares on the open market. See "--AMVESCAP Global Stock Plan" below
for more information.
(2) Includes information for the twelve months ended December 31, 1997
even though the individual did not serve as a director of the Company
until February 28, 1997.
(3) Includes information for the twelve months ended December 31, 1997 and
the twelve months ended December 31, 1998. Mr. Harris resigned as a
director of the Company on February 28, 1997, and was re-elected as a
director on May 7, 1998.
(4) Messrs. Starke and Stuttaford resigned as directors of the Company on
May 7, 1998.
(5) Sir John Banham is not listed because he was appointed a director of
the Company on January 1, 1999.
(6) Includes information for the twelve months ended December 31, 1997.
Ian R. Wilson resigned as a director of the Company on February 28,
1997.
L Refers to pounds sterling
38
<PAGE> 39
PENSION RIGHTS
The directors participate in a defined contribution pension scheme.
Contributions made in respect of directors' pensions arrangements in 1998 were
as follows:
<TABLE>
<CAPTION>
L'000
---------
<S> <C>
Charles W. Brady 18
Charles T. Bauer 19
The Hon. Michael D. Benson 26
Michael J. Cemo 17
Gary T. Crum 23
A.D. Frazier, Jr. 18
Robert H. Graham 27
Hubert L. Harris, Jr.(1) 18
Robert F. McCullough 18
Wendell M. Starke(1) 6
</TABLE>
- ---------
(1) Mr. Starke resigned as a director and Mr. Harris was re-elected as a
director of the Company on May 7, 1998.
L Refers to pounds sterling
COMPENSATION DECISIONS
AMVESCAP aims to attract, retain, reward and motivate the Company's
senior executives in a manner consistent with comparable companies around the
world and in a fashion designed to align the interests of those senior
executives with those of stockholders. During 1998, the Company complied with
Section A of the Best Practice Provisions annexed to the Listing Rules of the
LSE.
The Remuneration Committee of the Company's Board of Directors (the
"Committee"), which consists solely of non-executive directors, 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 portion of a bonus paid annually to each Global Partner (defined below).
The remuneration of the non-executive directors is determined by the Company's
Board of Directors as a whole.
The Committee in framing its remuneration policy has given full
consideration to Section B of the Best Practice Provisions 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 Executive Chairman and has access to
professional advice from sources outside the Company.
During 1998, 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 the Company operates and that the
geographic mobility of executives and senior professionals necessitated that
these factors be taken into account in determining appropriate remuneration
levels.
The Executive Chairman and executive directors (with the exception of
Messrs. Bauer, Graham, Cemo and Crum) are all employed under rolling one-year
contracts of employment. Pursuant to the terms of the AIM Merger, which were
approved by shareholders in general meeting, Messrs. Bauer, Graham, Cemo and
Crum have each entered into employment contracts for an initial period ending
February 2001 and terminable thereafter on one year's notice. Non-executive
directors do not have formal fixed term contracts; however, under the
Memorandum and Articles of Association of the Company they are required to
retire by rotation
39
<PAGE> 40
generally every three years, and their re-election is subject to shareholders'
approval. As a general rule it is envisaged that non-executive directors will
not serve beyond the Annual General Meeting following their 70th birthday.
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 the
Company's shareholders and the Company's performance, measured in terms of the
Company's returns and revenue during the relevant period. 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. Bonuses paid to all Global Partners are paid
partly in cash and partly in Ordinary Shares purchased for such purpose by the
AMVESCAP Global Stock Plan.
AMVESCAP GLOBAL STOCK PLAN
The Company 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 the
Company 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 the Company. Approximately pounds sterling9.8
million was paid into the AMVESCAP Global Stock Plan for the year ended
December 31, 1998. The AMVESCAP Global Stock Plan owned approximately 7.6
million Ordinary Shares at December 31, 1998. On such date, the executive
directors and executive officers had interests in the Ordinary Shares held by
the AMVESCAP Global Stock Plan as set forth in the following table.
<TABLE>
<CAPTION>
Vested Interests Unvested Interests
---------------- ------------------
<S> <C> <C>
Charles W. Brady 147,899 338,553
Charles T. Bauer -- 109,299
The Hon. Michael D. Benson 323 57,858
Michael J. Cemo -- 56,126
Gary T. Crum -- 74,334
A.D. Frazier, Jr. -- 72,347
Robert H. Graham -- 138,566
Hubert L. Harris, Jr. 42,972 93,584
Robert F. McCullough -- 91,384
</TABLE>
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
All outstanding options of the Company have been issued under the
AMVESCAP Executive Share Option Schemes and the AIM Option Schemes. At March 5,
1999, there were outstanding options to purchase 5,989,040 Ordinary Shares held
by directors and executive officers as a group (15 persons). The options
provided for exercise prices between 94.0p and 432.0p, and in the case of
Messrs. Canion and West, between pounds sterling0.25 and $0.859, and may
generally be exercised over varying periods until December 2008.
40
<PAGE> 41
The table below is a summary of outstanding options to acquire
Ordinary Shares held by directors of the Company as of December 31, 1998:
<TABLE>
<CAPTION>
NUMBER OPTION
NAME (1) OF SHARES EXERCISE PRICE EXPIRATION DATE
- ---- --------- -------------- ---------------
<S> <C> <C> <C>
Charles W. Brady 300,000 94.0p May 2000
124,027 160.0p January 2002
500,000 244.0p November 2003
100,000 422.5p November 2004
250,000 432.0p December 2008
Charles T. Bauer 100,000 422.5p November 2004
The Hon. Michael Benson 17,003 160.0p January 2002
400,000 244.0p November 2003
100,000 422.5p November 2004
200,000 432.0p December 2008
Michael J. Cemo 100,000 422.5p November 2004
100,000 432.0p December 2008
Gary T. Crum 100,000 422.5p November 2004
100,000 432.0p December 2008
A.D. Frazier, Jr. 500,000 244.0p November 2003
100,000 422.5p November 2004
200,000 432.0p December 2008
Robert H. Graham 100,000 422.5p November 2004
200,000 432.0p December 2008
Hubert L. Harris, Jr. 100,000 94.0p May 2000
100,000 242.0p 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
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
Joseph R. Canion 289,577 L 0.25 December 2003
96,461 $0.859 December 2005
Stephen K. West 211,972 L 0.25 December 2003
96,461 $0.859 December 2005
</TABLE>
(1) Sir John Banham is not listed because he was appointed a director of
the Company January 1, 1999.
L Refers to pounds sterling
41
<PAGE> 42
ITEM 13. INTERESTS OF MANAGEMENT IN CERTAIN TRANSACTIONS
Mr. Joseph R. Canion is a director and Chairman of Insource Technology
Group, Inc., which provides information technology services to the Company from
time to time for a fee. In 1998, total fees for services provided to the
Company amounted to approximately pounds sterling 3.3 million.
Mr. Roberto de Guardiola is managing director of Putnam, Lovell, de
Guardiola & Thornton (formerly Putnam, Lovell & Thornton) which provides
investment banking advice to the Company from time to time for a fee. Prior to
joining Putnam, Lovell & Thornton in 1997, he was Chief Executive of Roberto de
Guardiola Company, L.L.C. which provided investment banking services to AIM in
connection with the AIM Merger. In 1998, total fees for investment banking
advice provided to the Company by Putnam, Lovell, de Guardiola & Thornton
primarily in connection with the GT Global Acquisition amounted to
approximately pounds sterling 3.1 million.
PART II
ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED
Not applicable.
PART III
ITEM 15. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 16. CHANGES IN SECURITIES, CHANGES IN SECURITY FOR REGISTERED SECURITIES
AND USE OF PROCEEDS
In August 1998, the Company completed an exchange offer pursuant to
which it exchanged $250 million aggregate principal amount of its 6.375% Senior
Exchange Notes due 2003 (the "New Five Year Notes") for a like principal amount
of its 6.375% Senior Notes due 2003 (the "Old Five Year Notes"), and $400
million aggregate principal amount of its 6.600% Senior Exchange Notes due 2005
(together with the New Five Year Notes, the "New Notes") for a like principal
amount of its 6.600% Senior Notes due 2005 (together with the Old Five Year
Notes, the "Old Notes"). The Old Notes were issued on May 7, 1998 pursuant to
offerings exempt from registration under the Securities Act of 1933, as amended
(the "Securities Act"). The New Notes were registered under the Securities Act,
and were identical an all material respects to the terms of the Old Notes for
which they were offered in exchange, except for certain transfer restrictions
and registration rights relating to the Old Notes.
PART IV
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.
42
<PAGE> 43
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS
The following documents are filed as part of this report:
(a) Financial Statements:
Report of Independent Auditors
Consolidated Statements of Profit and Loss for the Years Ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Total Recognized Gains and Losses for the
Years Ended December 31, 1998, 1997 and 1996
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Cash Flow for the Years Ended December 31,
1998, 1997 and 1996
Notes to the Consolidated Financial Statements for the Years Ended
December 31, 1998, 1997 and 1996
(b) Exhibits:
1.1 Articles of Organization of the Company, incorporated by
reference to exhibit 3.1 to the Company'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 the Company, incorporated by
reference to exhibit 3.1 to the Company'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 the Company, incorporated by
reference to exhibit 3.2 to the Company's Registration
Statement on Form F-1 (file no. 33-95456), filed with the
Securities and Exchange Commission on August 22, 1995.
2.1 Form of Certificate for Ordinary Shares of the Company,
incorporated by reference to exhibit 4.5 to the Company'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 Ordinary Shares, incorporated by reference to
exhibit 4.6 to the Company'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.
2.3 Deposit Agreement, dated as of January 1, 1993, among the
Company, Morgan Guaranty Trust Company of New York and the
owners of American Depositary Receipts issued thereunder,
including the form of American Depositary Receipt,
incorporated by reference to exhibit 4.7 to the Company'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.
2.4 Amendment No. 1, dated August 15, 1995, to the Deposit
Agreement, dated as of January 1, 1993, among the Company,
Morgan Guaranty Trust Company of New York and the owners of
American Depositary Receipts issued thereunder, incorporated
by reference to exhibit 4.8
43
<PAGE> 44
to the Company'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.
2.5 Form of Amendment No. 2 to the Deposit Agreement, dated as of
January 1, 1993, among the Company, Morgan Guaranty Trust
Company of New York and the owners of American Depositary
Receipts issued thereunder, including the amended form of
American Depositary Receipt, incorporated by reference to
exhibit 2.5 to the Company's Annual Report on Form 20-F for
the year ended December 31, 1998, filed with the Securities
and Exchange Commission on April 27, 1998.
2.6 Amended and Restated Deposit Agreement, dated as of November
2, 1998, among the Company, The Bank of New York and the
owners of American Depositary Receipts issued thereunder,
incorporated by reference to exhibit a to the Company's
Registration Statement on Form F-6 (file no. 333-9558), filed
with the Securities and Exchange Commission on October 29,
1998.
3.1 Stock Purchase Agreement, dated as of January 30, 1998, by
and among the Company, AMD Acquisition Corp., Liechtenstein
Global Trust, AG and LGT Holding (International) AG, Zurich,
incorporated by reference to exhibit 3.1 to the Company's
Annual Report on Form 20-F for the year ended December 31,
1998, filed with the Securities and Exchange Commission on
April 27, 1998.
3.2 Amendment No. 1, dated as of May 28, 1998, to Stock Purchase
Agreement, dated as of January 30, 1998, by and among the
Company, AMD Acquisition Corp., Liechtenstein Global Trust,
AG and LGT Holding (International) AG, Zurich.
.
3.3 Agreement and Plan of Merger, dated as of November 4, 1996,
among the Company, INVESCO Group Services, Inc. and A I M
Management Group Inc., incorporated by reference to exhibit
2.1 to the Company'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.
3.4 Amendment No. 1 to the Agreement and Plan of Merger, dated as
of February 20, 1997, among the Company, INVESCO Group
Services, Inc. and A I M Management Group Inc., incorporated
by reference to exhibit 2.2 to the Company'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.
3.5 Amendment No. 2 to the Agreement and Plan of Merger, dated as
of February 27, 1997, among the Company, INVESCO Group
Services, Inc. and A I M Management Group Inc., incorporated
by reference to exhibit 2.3 to the Company'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.
3.6 Voting Agreement, dated as of November 4, 1996, by and among
the Company, the directors named therein and the shareholders
named therein, incorporated by reference to exhibit 2.2 to
the Company'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.
3.7 Standstill Agreement, dated as of November 4, 1996, by and
among the Company and the shareholders named therein,
incorporated by reference to exhibit 2.3 to the Company'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.
44
<PAGE> 45
3.8 Transfer Restriction Agreement, dated as of November 4, 1996,
by and among the Company, 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 the
Company'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.
3.9 Amended and Restated Transfer Restriction Agreement, dated as
of November 4, 1996, by and among the Company, 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 2.14 to the Company'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.
3.10 Waiver, dated as of February 28, 1997, regarding the Amended
and Restated Transfer Restriction Agreement, dated as of
November 4, 1996, by and among the Company, 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 the Company'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.
3.11 Waiver, dated as of May 1998, regarding the Amended and
Restated Transfer Restriction Agreement, dated as of November
4, 1996, by and among the Company, 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 the Company's Registration
Statement on Form F-3 (file no. 333-8680), filed with the
Securities and Exchange Commission on May 21, 1998.
3.12 Waiver, dated as of September 29, 1998, regarding the Amended
and Restated Transfer Restriction Agreement, dated as of
November 4, 1996, by and among the Company, 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.
3.13 Transfer Restriction Agreement (TA), dated as of November 4,
1996, by and among the Company and the parties named therein,
incorporated by reference to exhibit 2.5 to the Company'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.
3.14 Registration Rights Agreement, dated as of February 28, 1997,
by and among the Company and the former shareholders of A I M
Management Group, Inc. named therein, incorporated by
reference to exhibit 2.11 to the Company'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.
3.15 Lock-up Agreement, dated as of November 4, 1996, among the
Company, A I M Management Group Inc. and certain shareholders
of A I M Management Group Inc. named therein, incorporated by
reference to exhibit 2.7 to the Company'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.
45
<PAGE> 46
3.16 Transfer Administration Agreement, dated as of November 4,
1996, by and among the Company, certain shareholders named
therein, the spouses of the shareholders named therein and
State Street Bank and Trust Company, as Transfer
Administration Agent, incorporated by reference to exhibit
2.13 to the Company'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.
3.17 Indemnification Agreement, dated as of February 28, 1997, by
and among the Company, Charles T. Bauer, Robert H. Graham,
Gary T. Crum and certain related persons named therein,
incorporated by reference to exhibit 2.6 to the Company'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.
3.18 Credit Agreement, dated as of February 13, 1997, among the
Company, as borrower, the lenders named therein, Citibank,
N.A. and NationsBank, N.A., as managing agents, and
NationsBank, N.A., as funding agent, incorporated by
reference to exhibit 2.4 to the Company'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.
3.19 Guaranty, dated as of February 13, 1997, made by INVESCO,
Inc., INVESCO North American Holdings, Inc. and INVESCO
Capital Management, Inc., as guarantors, in favor of the
lenders named therein, incorporated by reference to exhibit
2.5 to the Company'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.
3.20 Amended and Restated Credit Agreement, dated as of December
17, 1997, among the Company, 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 the
Company'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.
3.21 Assumption of Guaranty from A I M Advisors, Inc., dated as of
December 22, 1997, incorporated by reference to exhibit 3.18
to the Company'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.
3.22 Assumption of Guaranty from A I M Management Group Inc.,
dated as of December 22, 1997, incorporated by reference to
exhibit 3.19 to the Company'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.
3.23 Amended and Restated Purchase and Sale Agreement dated as of
December 22, 1997, among A I M Management Group Inc.,
Citibank, N.A. and Citicorp North America, Inc., incorporated
by reference to exhibit 3.20 to the Company'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.
3.24 Indenture, among A I M Management Group Inc., A I M Advisors,
Inc. and Shawmut Bank Connecticut, National Association,
dated as of November 3, 1993, incorporated by reference to
exhibit 4 to A I M Management Group Inc.'s Quarterly Report
on Form 10-Q (file no. 33-67866) for the quarterly period
ended September 30, 1993.
46
<PAGE> 47
3.25 First Supplemental Indenture, among AVZ Inc., A I M Advisors,
Inc. and Fleet National Bank, dated as of February 28, 1997,
incorporated by reference to exhibit 4.2 to A I M Management
Group Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1996 (file no. 33-67866), filed with the
Securities and Exchange Commission on March 27, 1997.
3.26 Second Supplemental Indenture, dated as of February 28, 1997,
among the Company, A I M Advisors, Inc. and Fleet National
Bank, incorporated by reference to exhibit 4.3 to A I M
Management Group Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1996 (file no. 33-67866), filed with
the Securities and Exchange Commission on March 27, 1997.
3.27 Third Supplemental Indenture, dated as of October 20, 1997,
among A I M Management Group Inc., A I M Advisors, Inc. and
State Street Bank and Trust Company, incorporated by
reference to exhibit 3.24 to the Company'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.
3.28 Indenture, dated as of December 16, 1996, among LGT Asset
Management, Inc., LGT Bank in Liechtenstein
Aktiengesellschaft, and Citibank, N.A.
3.29 Loan Agreement, dated December 14, 1995, between LGT BIL Ltd.
And Bank in Liechtenstein Aktiengesellschaft.
3.30 Form of Level 11 Employment Agreement, incorporated by
reference to exhibit 2.8 to the Company'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.
3.31 Form of Level III Employment Agreement, incorporated by
reference to exhibit 2.9 to the Company'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.
3.32 Employment Agreement, dated as of November 4, 1996, between
the Company, A I M Management Group Inc. and Charles T.
Bauer, incorporated by reference to exhibit 2.9 to the
Company'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.
3.33 Employment Agreement, dated as of November 4, 1996, between
the Company, A I M Management Group Inc. and Gary T. Crum,
incorporated by reference to exhibit 2.9 to the Company's
Registration Statement on Form F-3/F-1 (file nos. 33-990 and
33-5990-01), filed with the Securities and Exchange
Commission on November 21, 1996.
3.34 Employment Agreement, dated as of November 4, 1996, between
the Company, A I M Management Group Inc. and Robert H.
Graham, incorporated by reference to exhibit 2.9 to the
Company'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.
3.35 Employment Agreement, dated as of November 4, 1996, between
the Company, A I M Management Group Inc. and Michael J. Cemo,
incorporated by reference to exhibit 2.9 to the Company'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.
47
<PAGE> 48
The Company agrees to furnish a list of its subsidiaries, including,
as to each subsidiary, its country or other jurisdiction of incorporation or
organization, its relationship to the Company and the percentage of voting
securities owned or other basis of control by its immediate parent, if any, to
the SEC upon request.
48
<PAGE> 49
AMVESCAP PLC AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
AMVESCAP PLC AND SUBSIDIARIES
Report of Independent Auditors F-2
Consolidated Statements of Profit and Loss for the Years Ended December 31, 1998, 1997
and 1996 F-3
Consolidated Statements of Total Recognized Gains and Losses for the Years Ended
December 31, 1998, 1997 and 1996 F-3
Consolidated Balance Sheets as of December 31, 1998 and 1997 F-4
Consolidated Statements of Cash Flow for the Years Ended December 31, 1998, 1997 and 1996 F-5
Notes to the Consolidated Financial Statements for the Years Ended December 31, 1998,
1997 and 1996 F-6
</TABLE>
F-1
<PAGE> 50
REPORT OF INDEPENDENT AUDITORS
To AMVESCAP PLC:
We have audited the accompanying consolidated balance sheets of AMVESCAP
PLC AND SUBSIDIARIES as of December 31, 1998 and 1997 and the related
consolidated statements of profit and loss, total recognized gains and losses,
and cash flow for each of the three years in the period ended December 31, 1998.
These 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 in the United Kingdom and the United States of America. 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, 1998 and 1997 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with accounting principles generally accepted in
the United Kingdom.
The accounting principles referred to above vary in certain respects from
accounting principles generally accepted in the United States of America. A
description of these differences and the adjustments required to conform
consolidated shareholders' equity as of December 31, 1998 and 1997 and
consolidated net income for each of the three years in the period ended December
31, 1998 to generally accepted accounting principles in the United States of
America are set forth in Note 25 to the consolidated financial statements.
As explained in Note 1 to the consolidated financial statements, effective
January 1, 1998, the Company changed its method of accounting for goodwill.
ARTHUR ANDERSEN
London, England
March 5, 1999
F-2
<PAGE> 51
AMVESCAP PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PROFIT AND LOSS
for the years ended December 31,
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
L'000 L'000 1998
ORDINARY EXCEPTIONAL L'000 1997 1996
Notes ACTIVITIES ITEM TOTAL L'000 L'000
- --------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES 802,172 -- 802,172 530,659 236,235
Operating expenses (544,856) (48,600) (593,456) (344,573) (171,976)
- --------------------------------------------- ---------- ---------- ---------- ---------- ----------
257,316 (48,600) 208,716 186,086 64,259
Goodwill amortization 13 (21,221) -- (21,221) -- --
- --------------------------------------------- ---------- ---------- ---------- ---------- ----------
OPERATING PROFIT 236,095 (48,600) 187,495 186,086 64,259
Investment income 4 12,183 -- 12,183 9,260 4,315
Interest payable 5 (38,200) -- (38,200) (18,053) (2,593)
- --------------------------------------------- ---------- ---------- ---------- ---------- ----------
PROFIT BEFORE TAXATION 6 210,078 (48,600) 161,478 177,293 65,981
Taxation 8 (75,173) 7,800 (67,373) (60,279) (20,986)
- --------------------------------------------- ---------- ---------- ---------- ---------- ----------
PROFIT FOR THE FINANCIAL YEAR 134,905 (40,800) 94,105 117,014 44,995
Dividends 9 (50,594) -- (50,594) (39,462) (16,952)
- --------------------------------------------- ---------- ---------- ---------- ---------- ----------
RETAINED PROFIT FOR THE YEAR 84,311 (40,800) 43,511 77,552 28,043
=================================================================================================================
EARNINGS PER ORDINARY 10
SHARE:
-basic 22.5p (6.8)p 15.7p 22.7p 17.7p
-diluted 21.1p (6.4)p 14.7p 20.8p 16.1p
EARNINGS PER ORDINARY
SHARE BEFORE GOODWILL
AMORTIZATION:
-basic 26.0p (6.8)p 19.2p 22.7p 17.7p
-diluted 24.3p (6.4)p 17.9p 20.8p 16.1p
=================================================================================================================
</TABLE>
L Refers to pounds sterling
A summary of movements in shareholders' funds is shown in Note 20 to the
consolidated financial statements.
CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES
for the years ended December 31,
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1998 1997 1996
L'000 L'000 L'000
--------- --------- --------
<S> <C> <C> <C>
- -------------------------------------------------------------------------
Profit for the financial year 94,105 117,014 44,995
Currency translation differences on investments in overseas subsidiaries 14,609 1,685 (6,032)
- ------------------------------------------------------------------------------------- --------- ---------
Total recognized gains and losses for the year 108,714 118,699 38,963
===============================================================================================================
</TABLE>
L Refers to pounds sterling
The accompanying notes are an integral part of these consolidated statements.
F-3
<PAGE> 52
AMVESCAP PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
as of December 31,
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
L'000 L'000
Notes 1998 1997
- --------------------------------------------------------------------- ---------- ----------
<S> <C> <C> <C>
FIXED ASSETS
Tangible assets 11 88,781 46,832
Investments 12 131,738 86,626
Goodwill 13 711,795 --
- --------------------------------------------------------------------- ---------- ----------
932,314 133,458
CURRENTS ASSETS
Debtors 14 479,381 190,155
Investments 15 79,469 26,554
Cash at bank and in hand 119,651 70,681
- --------------------------------------------------------------------- ---------- ----------
678,501 287,390
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 16 (544,461) (213,971)
- --------------------------------------------------------------------- ---------- ----------
NET CURRENT ASSETS 134,040 73,419
- --------------------------------------------------------------------- ---------- ----------
TOTAL ASSETS LESS CURRENT LIABILITIES 1,066,354 206,877
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Long-term debt 17 (686,010) (203,598)
Other creditors (5,936) (5,531)
---------- ----------
(691,946) (209,129)
PROVISIONS FOR LIABILITIES AND CHARGES 18 (43,438) (19,210)
- --------------------------------------------------------------------- ---------- ----------
NET ASSETS/(LIABILITIES) 330,970 (21,462)
==================================================================================================
CAPITAL AND RESERVES 20
Called up share capital 19 167,506 148,855
Share premium account 469,382 157,365
Profit and loss account 257,929 214,418
- --------------------------------------------------------------------- ---------- ----------
894,817 520,638
Other reserves (563,847) (542,100)
- --------------------------------------------------------------------- ---------- ----------
SHAREHOLDERS' FUNDS, EQUITY INTERESTS 330,970 (21,462)
=================================================================================================
</TABLE>
L Refers to pounds sterling
The accompanying notes are an integral part of these consolidated balance
sheets.
F-4
<PAGE> 53
AMVESCAP PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
for the years ended December 31,
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Notes 1998 1997 1996
L'000 L'000 L'000
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Operating profit 187,495 186,086 64,259
Exceptional item 32,207 -- --
Depreciation 26,216 18,197 5,429
Amortization of goodwill 21,221 -- --
Decrease/(increase) in debtors 39,999 590 (32,831)
(Decrease)/increase in creditors (147,730) 32,602 18,828
Other 453 (3,475) (1,396)
- --------------------------------------------------------------------------------- ----------- -----------
CASH PROVIDED BY OPERATIONS 159,861 234,000 54,289
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest and dividends received 10,804 9,426 4,162
Interest paid (34,210) (18,624) (3,095)
- --------------------------------------------------------------------------------- ----------- -----------
(23,406) (9,198) 1,067
TAXATION (60,111) (54,683) (18,103)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets, net of sales (54,644) (24,269) (6,548)
Purchase of fixed asset investments, net of sales of
pounds sterling 33,521,000 in 1998 (18,706) (10,967) (27,667)
- --------------------------------------------------------------------------------- ----------- -----------
(73,350) (35,236) (34,215)
ACQUISITIONS, NET OF CASH, LIQUID RESOURCES, AND
BANK OVERDRAFT ACQUIRED (126,959) (337,409) (13,866)
DIVIDENDS PAID (44,410) (25,942) (14,662)
- --------------------------------------------------------------------------------- ----------- -----------
CASH OUTFLOW BEFORE THE USE OF LIQUID RESOURCES (168,375) (228,468) (25,490)
MANAGEMENT OF LIQUID RESOURCES 22 (33,833) 155,362 (114,385)
FINANCING
Issues of ordinary share capital 5,170 2,079 --
Issue of senior notes 395,155 -- --
Credit facility, net 72,889 202,982 --
Repayment of other loans (297,532) (68,800) --
Proceeds from rights offering -- -- 119,392
- --------------------------------------------------------------------------------- ----------- -----------
175,682 136,261 119,392
(DECREASE)/INCREASE IN CASH (26,526) 63,155 (20,483)
================================================================================= =========== ===========
</TABLE>
L Refers to pounds sterling
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 54
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
(a) BASIS OF ACCOUNTING
The accounts have been prepared under the historical cost accounting rules
and in accordance with applicable accounting standards.
(b) BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of AMVESCAP PLC
and its wholly-owned subsidiary undertakings. All significant intercompany
accounts and transactions have been eliminated.
(c) 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,
in accordance with Financial Reporting Standard 10, "Goodwill and Intangible
Assets," which the Company adopted in 1998. Prior to 1998, goodwill was charged
directly to reserves.
(d) REVENUE
Revenue represents management, distribution, transfer agent, trading, and
other fees.
(e) 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 land and buildings over the lease term; computers and
other various equipment, between three and ten years.
(f) INVESTMENTS
Investments held as fixed assets in the balance sheets 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.
(h) TAXATION
Corporation tax payable is provided on taxable profits at the current rate.
Advance corporation tax payable on dividends paid or provided for in the year is
written off, except when recoverability against corporation tax payable is
considered to be reasonably assured. Credit is taken for advance corporation tax
written off in previous years when it is recovered against corporation tax
liabilities.
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.
F-6
<PAGE> 55
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(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 AND MERGERS
On May 29, 1998, the Company completed its acquisition of several legal
entities within the Asset Management Division of Liechtenstein Global Trust AG
(collectively referred to as "GT Global"). The results of GT Global have been
included from June 1, 1998.
The fair value of the net assets acquired was determined as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FAIR VALUE
BOOK VALUE ADJUSTMENTS FAIR VALUE
L'000 L'000 L'000
- ----------------------------------------------------------------------------------------------------
thousands of pounds sterling
<S> <C> <C> <C>
Fixed assets 166,106 (128,122) 37,984
Current assets 460,663 36,687 497,350
-----------------------------------------
Total assets 626,769 (91,435) 535,334
-----------------------------------------
Creditors: amounts falling due within one year (372,898) (2,920) (375,818)
Creditors: amounts falling due after more than one year (275,136) (25,767) (300,903)
1998 provisions for reorganization (79,206) 1,402 (77,804)
Provisions for liabilities and charges (282) -- (282)
-----------------------------------------
Total liabilities (727,522) (27,285) (754,807)
-----------------------------------------
Net liabilities (100,753) (118,720) (219,473)
-----------------------------------------
Goodwill 729,473
-----------
Consideration 510,000
-----------
Satisfied by:
Issuance of 42.5 million new ordinary shares 273,821
Cash 236,179
-----------
510,000
====================================================================================================
</TABLE>
L Refers to pounds sterling
The Company revalued all assets and liabilities acquired to fair market
value at the date of the acquisition. The principal adjustments relate to the
write-off of existing goodwill balances, and the revaluations of deferred broker
commissions, debt balances and lease costs, together with the related tax
effects of the adjustments.
F-7
<PAGE> 56
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
GT Global's profit for the financial year ended December 31, 1997 was
pounds sterling 16,516,000 as reported under International Accounting
Standards. Results of GT Global for the period January 1, 1998 to May 29, 1998
are not meaningful due to the extent of the subsequent restructuring of the
acquired businesses, and the fact that the acquired entities did not
collectively operate as a separate business prior to the acquisition.
The operations of GT Global have been reorganized, integrated and merged
into the existing AMVESCAP business units. The operating results and cashflows
of the AMVESCAP business units do not separately segregate the former GT Global
operations. It is therefore not possible to determine or estimate the
post-acquisition results of the former GT Global companies. The cost of this
integration program is pounds sterling 48.6 million (pounds sterling 40.8
million after tax), which has been recorded as an exceptional item in 1998.
Costs include staff retention and redundancy payments and expenses associated
with terminating lease arrangements for excess office space and other costs
associated with the integration of the businesses. The exceptional provisions
remaining at December 31, 1998 were pounds sterling 28.4 million, after cash
payments of pounds sterling 16.4 million and non-cash write-offs of pounds
sterling 3.8 million.
1997 - MERGER WITH A I M MANAGEMENT GROUP INC.
On February 28, 1997, the Company completed its merger with A I M
Management Group Inc. ("AIM"). The transaction has been accounted for as an
acquisition and AIM's results have been included from March 1, 1997.
Total consideration for the merger was pounds sterling 1.1 billion. The
Company acquired all of the issued and outstanding shares of capital stock of
AIM, and issued 252.3 million new ordinary shares of the Company's stock. The
fair value of net assets acquired was pounds sterling 44.3 million. The balance
of the consideration of pounds sterling 372.1 million was paid in cash from the
net proceeds for the rights offering completed in February 1997 and from amounts
drawn under a credit facility. Options over a further 37.7 million shares were
also granted at the merger date. Pounds sterling 1.0 billion of goodwill was
created during the merger and was written off to other reserves.
3. SEGMENTAL INFORMATION
Geographical analysis of the Company's business, which is principally
investment management, is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
REVENUE PROFIT AFTER EXCEPTIONAL ITEM
----------------------------------------- ---------------------------------------
1998 1997 1996 1998 1997 1996
L'000 L'000 L'000 L'000 L'000 L'000
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
North America 659,241 457,379 175,856 208,379 184,234 62,690
Europe and Pacific 142,931 73,280 60,379 285 3,148 2,294
----------- ----------- ----------- ----------- ----------- -----------
802,172 530,659 236,235 208,664 187,382 64,984
=========== =========== ===========
Goodwill amortization (21,221) -- --
Net interest (payable)/
receivable (25,965) (10,089) 997
----------- ----------- -----------
Profit before taxation 161,478 177,293 65,981
=============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
NET ASSETS
------------------------------
1998 1997
L'000 L'000
- -------------------------- ------------------------------
<S> <C> <C>
North America 143,701 107,497
Europe and Pacific 98,133 33,768
- -------------------------- ------------------------------
241,834 141,265
Goodwill 711,795 --
Net debt (622,659) (162,727)
- -------------------------- ------------------------------
Net assets/(liabilities) 330,970 (21,462)
===============================================================================
</TABLE>
L Refers to pounds sterling
F-8
<PAGE> 57
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The US dollar profits have been translated into sterling at an average rate
for 1998 of 1.66 (1997: 1.64, 1996: 1.56). Revenue reflects the geographical
segments from which services are provided and is not materially different from
the geographical segments to which services are provided. The revenues, profits,
and net assets for all regions have been impacted by the acquisition of GT
Global in 1998 (see Note 2).
4. INVESTMENT INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
L'000 L'000 L'000
- ------------------------------------------------------------------------ --------------------------------------------------
<S> <C> <C> <C>
Interest receivable 12,235 7,964 3,590
(Loss)/income from listed investments (1,347) 548 140
Income from unlisted investments 1,295 748 585
- ---------------------------------------------------------------------------------------------------------------------------
12,183 9,260 4,315
===========================================================================================================================
</TABLE>
L Refers to pounds sterling
5. INTEREST PAYABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
L'000 L'000 L'000
- ------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
AMVESCAP senior notes 16,771 -- --
Credit facility 13,501 8,950 --
Other 7,928 9,103 2,593
- ------------------------------------- ----------- ----------- -----------
38,200 18,053 2,593
===========================================================================================================================
</TABLE>
L Refers to pounds sterling
6. PROFIT BEFORE TAXATION
Profit before taxation is stated after charging the following items:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
L'000 L'000 L'000
- ------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Auditor's remuneration, including expenses:
Audit work 878 667 725
Non-audit work 905 665 845
===========================================================================================================================
</TABLE>
L Refers to pounds sterling
7. DIRECTORS AND EMPLOYEES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
L'000 L'000 L'000
- ------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Wages and salaries 237,008 153,531 81,548
Social security costs 14,366 8,377 4,187
Other pension costs 17,451 11,237 7,976
- ------------------------------------------------- ----------- ----------- -----------
268,825 173,145 93,711
===========================================================================================================================
</TABLE>
L Refers to pounds sterling
GLOBAL STOCK PLAN ("THE PLAN")
A sum of pounds sterling 9,826,000 (1997: pounds sterling 8,340,000, 1996:
pounds sterling sterling 4,506,000) 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 or share equivalents 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, the shares will be transferred to the
participants upon retirement or termination of employment. The trust held
7,632,000 ordinary shares at December 31, 1998 (1997: 5,618,000, 1996:
4,040,000).
The average number of employees of the Company during the year was 4,500
(1997: 3,100, 1996: 1,420). Of these totals, 3,600 (1997: 2,580, 1996: 926) were
employed in North America and the remainder were employed in Europe and the
Pacific.
F-9
<PAGE> 58
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. TAXATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
L'000 L'000 L'000
- ---------------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
UK taxation:
Corporation tax at 31.0 percent (1997: 31.5 percent, 1996: 33.0 percent) 2,500 4,406 2,942
ACT recoverable -- (476) (2,047)
- ---------------------------------------------------------------------------- ----------- ----------- -----------
2,500 3,930 895
Overseas current taxation 58,770 52,297 20,091
Overseas deferred taxation 6,103 4,052 --
- ---------------------------------------------------------------------------- ----------- ----------- -----------
67,373 60,279 20,986
===================================================================================================================================
</TABLE>
L Refers to pounds sterling
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.
9. DIVIDENDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
L'000 L'000 L'000
- --------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Interim paid, 3p per share (1997: 2.5p, 1996: 2p) 18,900 13,952 4,962
Final proposed, 5p per share (1997: 4.5p, 1996: 4p) 31,694 25,510 11,990
- --------------------------------------------------------- ----------- ----------- -----------
50,594 39,462 16,952
=================================================================================================================
</TABLE>
L Refers to pounds sterling
The trustees of the Employee Share Option Trust ("ESOT") waived dividends
amounting to pounds sterling 2,470,000 in 1998 (1997: pounds sterling
1,789,000, 1996: pounds sterling 1,448,000).
10. EARNINGS PER SHARE
Diluted earnings per share takes into account the effect of dilutive
potential ordinary shares outstanding during the period. The Company has
calculated its 1998 diluted earnings per share amounts using the methods
prescribed in FRS 14, which was adopted in 1998, and has restated all prior
periods presented. The directors consider that the profit before exceptional
item and goodwill amortization is a more appropriate basis for the calculation
of earnings per ordinary share since this represents a more consistent measure
of the year by year performance of the business.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 PROFIT BEFORE
EXCEPTIONAL ITEM
AND GOODWILL NUMBER OF
AMORTIZATION SHARES PER SHARE
L'000 L'000 amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE 156,126 601,234 26.0p
===========
Issuance of options -- 33,145
Conversion of loan note 521 8,977
- --------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE 156,647 643,356 24.3p
================================================================================
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 NUMBER OF
PROFIT SHARES PER SHARE
L'000 L'000 amount
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE 117,014 516,309 22.7p
===========
Issuance of options -- 31,790
Conversion of loan note 1,140 19,253
- ----------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE 118,154 567,352 20.8p
==================================================================================
</TABLE>
L Refers to pounds sterling
F-10
<PAGE> 59
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
1996 NUMBER OF
PROFIT SHARES PER SHARE
L'000 L'000 amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE 44,995 254,768 17.7p
===========
Issuance of options -- 9,963
Conversion of loan note 1,521 23,496
- --------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE 46,516 288,227 16.1p
=========== =========== ===========
</TABLE>
L Refers to pounds sterling
11. TANGIBLE ASSETS
Tangible assets are comprised of technology and other equipment.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST DEPRECIATION NET BOOK VALUE
L'000 L'000 L'000
- ----------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
At December 31, 1996 44,019 (23,602) 20,417
Exchange adjustment 438 (188) 250
Additions 25,463 -- 25,463
Arising from acquisitions 19,770 -- 19,770
Provided during the year -- (18,197) (18,197)
Disposals (2,727) 1,856 (871)
- ----------------------------------------------------------------------- ----------- ----------- -----------
At December 31, 1997 86,963 (40,131) 46,832
- ----------------------------------------------------------------------- ----------- ----------- -----------
Exchange adjustment (1,963) 800 (1,163)
Additions 59,554 -- 59,554
Arising from acquisitions 14,645 -- 14,645
Provided during the year -- (26,216) (26,216)
Disposals (24,971) 20,100 (4,871)
- ----------------------------------------------------------------------- ----------- ----------- -----------
At December 31, 1998 134,228 (45,447) 88,781
=======================================================================================================================
</TABLE>
L Refers to pounds sterling
Leased assets with a net book value of pounds sterling 1,818,000 (1997:
pounds sterling 1,830,000) are included in tangible assets.
12. INVESTMENTS (HELD AS FIXED ASSETS)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OF OTHER
AMVESCAP PLC INVESTMENTS TOTAL
L'000 L'000 L'000
- ---------------------------------------------- ------------ ----------- -----------
<S> <C> <C> <C>
Cost
At December 31, 1996 66,629 11,276 77,905
Additions 16,229 1,699 17,928
Arising from acquisition -- 5,470 5,470
Disposals (6,520) (441) (6,961)
- ---------------------------------------------- ------------ ----------- -----------
At December 31, 1997 76,338 18,004 94,342
Additions 37,770 9,639 47,409
Arising from acquisition -- 27,078 27,078
Disposals (5,715) (27,918) (33,633)
- ---------------------------------------------- ----------- ----------- -----------
At December 31, 1998 108,393 26,803 135,196
============================================== =========== =========== ===========
Provisions against investments
At December 31, 1997 and 1996 (2,027) (5,689) (7,716)
Disposals -- 4,258 4,258
- ---------------------------------------------- ----------- ----------- -----------
At December 31, 1998 (2,027) (1,431) (3,458)
- ---------------------------------------------- ----------- ----------- -----------
Net book value
At December 31, 1997 74,311 12,315 86,626
============================================================================================
At December 31, 1998 106,366 25,372 131,738
============================================================================================
</TABLE>
L Refers to pounds sterling
F-11
<PAGE> 60
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Shares of AMVESCAP PLC include the holdings of the ESOT and comprise
34,634,000 (1997: 31,385,000) ordinary shares, all of which are under option at
December 31, 1998 to qualifying employees of the Company. Under normal
circumstances, the options are not capable of being exercised within three years
of the date they were granted, and they lapse after 10 years. At December 31,
1998 there were options over these securities at exercise prices between 90p and
654p. The market price of the ordinary shares at the end of 1998 was 466.25p.
Other investments at December 31, 1998 primarily consist of investments in
various AMVESCAP mutual funds and unit trusts, investments on behalf of deferred
compensation plans, and investments in insurance companies.
13. GOODWILL
Goodwill arising from acquisitions in 1998 amounted to pounds sterling
733.0 million, pounds sterling 729.5 million from the acquisition of GT Global,
pounds sterling 3.1 million from the purchase of the remaining minority interest
of a subsidiary, and pounds sterling 0.4 million from the acquisition of two
mutual funds. Amortization of goodwill in 1998 amounted to pounds sterling 21.2
million.
Prior goodwill has been written off as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
L'000
- ------------------------------------------------------------------------------------
<S> <C>
To other reserves 1,184,339
To cancellation of share premium account 44,468
To profit and loss account 73,600
- ------------------------------------------------------------------------------------
1,302,407
====================================================================================
</TABLE>
L Refers to pounds sterling
14. DEBTORS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1998 1997
L'000 L'000
- ------------------------------------------ ----------- -----------
<S> <C> <C>
Trade debtors 187,549 107,645
Other debtors 100,785 41,352
Prepayments and accrued income 13,830 11,071
Taxation prepaid/recoverable 13,200 8,456
Deferred taxation 31,859 21,631
Customer and counterparty deposits 132,158 --
- ------------------------------------------ ----------- -----------
479,381 190,155
================================================================================
</TABLE>
L Refers to pounds sterling
Deferred taxation principally arises in relation to employee share options,
contributions to the Global Stock Plan, and certain items related to the
acquisition of GT Global.
15. INVESTMENTS (HELD AS CURRENT ASSETS)
Included in current asset investments are listed overseas investments of
pounds sterling 75,367,000 (1997: pounds sterling 24,504,000) and unlisted
investments of pounds sterling 4,102,000 (1997: pounds sterling 2,050,000).
F-12
<PAGE> 61
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
16. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
L'000 L'000
- ---------------------------------------------- ----------- -----------
<S> <C> <C>
Trade creditors 99,174 62,614
Other creditors 78,856 21,369
Current maturities of long-term debt 7,195 25,991
Bank overdraft 47,700 2,556
Corporation tax payable 14,747 16,784
Proposed ordinary dividend 31,694 25,510
Accruals and deferred income 128,258 59,147
Customer and counterparty creditors 136,837 --
- ---------------------------------------------- ----------- -----------
544,461 213,971
================================================================================
</TABLE>
L Refers to pounds sterling
At December 31, 1997, the sterling equivalent of US$25,379,533 is also
included in creditors falling due within one year relating to the 8.75 percent
Convertible Unsecured Loan Note 1998 ("CULN"). The note, which was redeemable at
par, was converted in 1998 at the rate of approximately 57.75 ordinary shares
per US$100 principal amount.
17. LONG-TERM DEBT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
L'000 L'000
- -------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
US$700 million (L 417.2 million) credit facility due 2002 271,278 203,598
CULN due 1998 at 8.75% -- 15,425
Senior notes - US$17.4 million due 1998 at 9% -- 10,566
Senior notes - US$250 million due 2003 at 6.375% and
US$400 million due 2005 at 6.6% 387,366 --
DM 60 million fixed notes due 1999 - 2003,
interest 5.2% - 6.75% 21,344 --
Senior notes - US$9.8 million due 2001 at 6.5% and
US$10 million due 2006 at 6.875% 12,841 --
Other debt 376 --
- -------------------------------------------------------------------- ----------- -----------
Total long-term debt 693,205 229,589
Less: current maturities of long-term debt (7,195) (25,991)
- -------------------------------------------------------------------- ----------- -----------
Total long-term debt, net of current maturities 686,010 203,598
======================================================================================================
</TABLE>
L Refers to pounds sterling
The US$700 million 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.
Maturities of long-term debt are as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
L'000
- ----------------------------------------------------- -----------
<S> <C>
1999 7,195
2000 81
2001 13,534
2002 271,358
2003 156,156
Thereafter 244,881
- ----------------------------------------------------- -----------
693,205
========================================================================
</TABLE>
L Refers to pounds sterling
F-13
<PAGE> 62
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
18. PROVISIONS FOR LIABILITIES AND CHARGES
Other provisions at December 31, 1998 on the Company balance sheet consist
of pounds sterling 25.9 million in provisions related to the GT Global
acquisition, pounds sterling 14.0 million in provisions related to the AIM
merger, and pounds sterling 3.5 million in other provisions.
19. SHARE CAPITAL
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
NUMBER L'000 NUMBER L'000
------------------------- -------------------------
<S> <C> <C> <C> <C>
Authorized ordinary shares of
25p each 850,800,000 212,700 770,800,000 192,700
- ----------------------------------- ----------- ----------- ----------- ----------
Allotted, called up, and fully paid
ordinary shares of 25p each 670,023,406 167,506 595,419,323 148,855
===========================================================================================
</TABLE>
L Refers to pounds sterling
During the year the Company has issued the following shares:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
- ---------------------------------------------------------- ----------
<S> <C>
On completion of the acquisition of GT Global 42,500,000
Options exercised 17,448,099
Conversion of the CULN 14,655,984
- ---------------------------------------------------------- ----------
74,604,083
=================================================================================
</TABLE>
L Refers to pounds sterling
At December 31, 1998 shares are reserved for the following purposes:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAST EXPIRY
SHARES PRICES DATE
- ------------------------------------------------------- ------------ ----------- -------------
<S> <C> <C> <C>
Options arising from the AIM merger 13,630,053 25p-72p April 2006
Subscription agreement (options) with the ESOT 41,000,000 244p-452p Nov 2004
Options granted under the UK Sharesave Scheme 355,645 334p Nov 2000
Options granted under International Sharesave Plan 390p Feb 2001
1,795,350
------------
56,781,048
=======================================================================================================
</TABLE>
L Refers to pounds sterling
F-14
<PAGE> 63
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
20. SHAREHOLDERS' FUNDS
Movements in shareholders' funds for the Company comprise:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL PROFIT AND
SHARE SHARE REDEMPTION OTHER LOSS
CAPITAL PREMIUM RESERVE RESERVES ACCOUNT TOTAL
L'000 L'000 L'000 L'000 L'000 L'000
- -------------------------------------------------------------------------------------------------------------------
in thousands of pounds sterling
<S> <C> <C> <C> <C> <C> <C>
At December 31, 1995 69,309 29,359 1,469 (116,066) 108,823 92,894
Profit for the financial year -- -- -- -- 44,995 44,995
Dividends -- -- -- -- (16,952) (16,952)
Goodwill written off -- -- -- (7,430) -- (7,430)
Cancellation of deferred shares (2,523) -- 2,523 -- -- --
Conversion of loan note 965 3,610 -- -- -- 4,575
Exercise of options 97 215 -- -- -- 312
Currency translation
differences
on investments in overseas
subsidiaries -- -- -- (6,032) -- (6,032)
- -------------------------------------------------------------------------------------------------------------------
Change in shareholders' funds (1,461) 3,825 2,523 (13,462) 28,043 19,468
- -------------------------------------------------------------------------------------------------------------------
At December 31, 1996 67,848 33,184 3,992 (129,528) 136,866 112,362
Profit for the financial year -- -- -- -- 117,014 117,014
Dividends -- -- -- -- (39,462) (39,462)
Goodwill written off -- -- -- (1,022,790) -- (1,022,790)
AIM merger 63,086 -- -- 537,491 -- 600,577
Exercise of options 1,323 11,206 -- (10,450) -- 2,079
Rights issue 13,567 103,373 -- -- -- 116,940
Conversion of loan note 3,031 9,602 -- -- -- 12,633
Warrant reserve for the AIM
merger -- -- -- 77,500 -- 77,500
Currency translation
differences
on investments in overseas
subsidiaries -- -- -- 1,685 -- 1,685
- -------------------------------------------------------------------------------------------------------------------
Change in shareholders' funds 81,007 124,181 -- (416,564) 77,552 (133,824)
- -------------------------------------------------------------------------------------------------------------------
At December 31, 1997 148,855 157,365 3,992 (546,092) 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
- -------------------------------------------------------------------------------------------------------------------
Change in shareholders' funds 18,651 312,017 -- (21,747) 43,511 352,432
At December 31, 1998 167,506 469,382 3,992 (567,839) 257,929 330,970
====================================================================================================================
</TABLE>
L Refers to pounds sterling
F-15
<PAGE> 64
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
21. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1998 1997 1996
L'000 L'000 L'000
- --------------------------------------------------------------------------------------------------------------
in thousands of pounds sterling
<S> <C> <C> <C>
(Decrease)/increase in cash (26,526) 63,155 (20,483)
Cash outflow from debt and lease financing 415 164 504
Cash inflow from issuance of CULS -- -- (119,392)
Cash inflow from bank loans (173,519) (134,182) --
Cash outflow/(inflow) from liquid resources 33,833 (155,362) 114,385
- --------------------------------------------------------------------------------------------------------------
Change in net debt resulting from cash flows (165,797) (226,225) (24,986)
- --------------------------------------------------------------------------------------------------------------
Debt due within one year 8,454 54,706 2,447
Debt due after more than one year (317,662) -- --
Net finance leases (557) 219 (568)
Translation difference 15,630 1,000 (2,361)
- --------------------------------------------------------------------------------------------------------------
Change in net debt resulting from non-cash changes and translation (294,135) 55,925 (482)
- --------------------------------------------------------------------------------------------------------------
Movement in net debt in the year (459,932) (170,300) (25,468)
Net debt beginning of the year (162,727) 7,573 33,041
- --------------------------------------------------------------------------------------------------------------
Net debt end of the year (622,659) (162,727) 7,573
==============================================================================================================
</TABLE>
L Refers to pounds sterling
22. ANALYSIS OF NET DEBT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1998 NON-CASH
DECEMBER 31, CHANGES AND DECEMBER 31,
1997 CASH FLOW TRANSLATION 1998
L'000 L'000 L'000 L'000
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET CASH:
Cash at bank and in hand, including cash
acquired on acquisition of L8,095,000 70,681 51,983 (3,013) 119,651
Less: deposits treated as liquid resources,
including liquid resources acquired on
acquisition of L108,393,000 (35,250) (33,833) 1,123 (67,960)
- ---------------------------------------------------------------------------------------------------------------------------
35,431 18,150 (1,890) 51,691
Bank overdrafts, including bank overdrafts
acquired on acquisition of L22,703,000 (2,556) (44,676) (468) (47,700)
- ---------------------------------------------------------------------------------------------------------------------------
32,875 (26,526) (2,358) 3,991
Liquid resources 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) (165,797) (294,135) (622,659)
===========================================================================================================================
</TABLE>
L Refers to pounds sterling
F-16
<PAGE> 65
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Analysis of net debt continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1997 NON-CASH
DECEMBER 31, CHANGES AND DECEMBER 31,
1996 CASH FLOW TRANSLATION 1997
L'000 L'000 L'000 L'000
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET CASH:
Cash at bank and in hand, including cash
acquired on acquisition of L2,114,000 170,818 (102,315) 2,178 70,681
Less: deposits treated as liquid resources, including
liquid resources acquired on acquisition of
L36,853,000 (153,008) 155,362 (37,604) (35,250)
- ---------------------------------------------------------------------------------------------------------------------------
17,810 53,047 (35,426) 35,431
Bank overdrafts (12,664) 10,108 -- (2,556)
- ---------------------------------------------------------------------------------------------------------------------------
5,146 63,155 (35,426) 32,875
Liquid resources 153,008 (155,362) 37,604 35,250
Debt due within one year (146,807) 68,800 52,016 (25,991)
Debt due after more than one year (2,128) (202,982) 1,512 (203,598)
Finance leases (1,646) 164 219 (1,263)
- ---------------------------------------------------------------------------------------------------------------------------
Total 7,573 (226,225) 55,925 (162,727)
===========================================================================================================================
</TABLE>
L Refers to pounds sterling
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
1996 NON-CASH
DECEMBER 31, CHANGES AND DECEMBER 31,
1995 CASH FLOW TRANSLATION 1996
L'000 L'000 L'000 L'000
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET CASH:
Cash at bank and in hand 68,932 106,566 (4,680) 170,818
Less: deposits treated as liquid resources (41,934) (114,385) 3,311 (153,008)
- --------------------------------------------------------------------------------------------------------------------------
26,998 (7,819) (1,369) 17,810
Bank overdrafts -- (12,664) -- (12,664)
- --------------------------------------------------------------------------------------------------------------------------
26,998 (20,483) (1,369) 5,146
Liquid resources 41,934 114,385 (3,311) 153,008
Debt due within one year (34,309) (119,392) 6,894 (146,807)
Debt due after more than one year -- -- (2,128) (2,128)
Finance leases (1,582) 504 (568) (1,646)
- --------------------------------------------------------------------------------------------------------------------------
Total 33,041 (24,986) (482) 7,573
==========================================================================================================================
</TABLE>
L Refers to pounds sterling
23. COMMITMENTS AND CONTINGENCIES
PENSION COMMITMENTS
The Company operates a number of pension schemes throughout the world. All
are defined contribution schemes with the exception of several small schemes
operating for employees in the UK, US, Hong Kong, Germany and Channel Islands,
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, 1998 all plans are fully funded, with
the exception of the Germany schemes, which are unfunded in accordance with
local practice. The Company will keep its level of contributions under review in
accordance with the actuaries' recommendations. The costs amounted to pounds
sterling 3,774,000 (1997: pounds sterling 2,374,000, 1996:
pounds sterling 2,405,000) in respect of the defined benefit schemes
and pounds sterling 13,677,000 (1997: pounds sterling
8,863,000, 1996: pounds sterling 5,571,000) in respect of the
defined contribution schemes.
F-17
<PAGE> 66
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
LEASE COMMITMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
LAND AND BUILDINGS OTHER
-----------------------------------------------------
OPERATING LEASES WHICH EXPIRE: 1998 1997 1998 1997
L'000 L'000 L'000 L'000
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Within one year 1,932 712 277 85
Within two to five years inclusive 9,683 3,795 1,895 463
In more than five years 4,535 6,145 -- --
- ------------------------------------------------------------------------------------------
16,150 10,652 2,172 548
==========================================================================================
</TABLE>
L Refers to pounds sterling
The majority of the leases of land and buildings are subject to rent
reviews.
CONTINGENT LIABILITIES
(a) Guarantees and contingencies may arise in the ordinary course of
business. The directors have not been notified of any material claims arising
from such commitments.
(b) In the normal course of business, the Company is subject to various
litigation; 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.
24. FINANCIAL INSTRUMENTS
The interest rate profile of the financial liabilities of the Company at
December 31, 1998 was:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FIXED RATE FINANCIAL LIABILITIES
--------------------------------------
WEIGHTED AVERAGE
WEIGHTED AVERAGE PERIOD FOR WHICH
CURRENCY TOTAL FLOATING RATE FIXED RATE INTEREST RATE RATE IS FIXED
L'000 L'000 L'000 % YEARS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
US Dollar 676,142 275,576 400,566 6.5 5.6
DM 52,859 31,515 21,344 6.0 3.0
Sterling 10,433 10,023 410 12.0 1.0
Other 2,876 2,240 636 8.0 3.5
- --------------------------------------------------------------------------------------------------------------------------
Total 742,310 319,354 422,956 6.5 5.5
==========================================================================================================================
</TABLE>
L Refers to pounds sterling
The Company held the following financial assets at December 31, 1998:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE
INTEREST RATE
L'000 %
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
US Dollar cash deposits 72,738 N/A
Sterling cash deposits 25,207 N/A
Other cash deposits 22,745 N/A
DM debt securities 47,793 3.5
US Treasury bills 3,548 4.35
- -------------------------------------------------------------------------------------------------------------------------
Total 172,031
=========================================================================================================================
</TABLE>
L Refers to pounds sterling
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. For the DM securities and US Treasury bills, the weighted
average time for which the rate is fixed is 0.2 years.
F-18
<PAGE> 67
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company has excluded debtors and creditors from its financial
instrument disclosures. Included in debtors and creditors are customer and
counterparty receivables and payables, respectively. The majority of these
amounts mature within three months, and at December 31, 1998, there was no
material interest rate gap on these amounts. There were no material differences
between the book values and the fair values of the financial assets and
liabilities at December 31, 1998.
25. RECONCILIATION TO US ACCOUNTING PRINCIPLES
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").
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
1998 1997 1996
L'000 L'000 L'000
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Profit for the financial year under UK GAAP 94,105 117,014 44,995
US GAAP adjustments:
Acquisition accounting (a) (36,091) (44,496) (13,592)
Taxation (b) (13,613) (4,647) (657)
Other (f) (150) 1,082 306
- -------------------------------------------------------------------------------------------------------
Net income under US GAAP 44,251 68,953 31,052
=======================================================================================================
Earnings per share under US GAAP (basic) 7p 13p 12p
=======================================================================================================
Earnings per share under US GAAP (diluted) 7p 12p 11p
=======================================================================================================
</TABLE>
L Refers to pounds sterling
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
1998 1997
L'000 L'000
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholders' funds under UK GAAP 330,970 (21,462)
US GAAP adjustments:
Acquisition accounting (a) 1,022,254 1,079,307
Deferred taxation (b) (1,027) (4,764)
Treasury stock (c) (131,857) (82,138)
Dividends (d) 31,694 25,510
Loans of employee stock ownership plans (e) (2,309) (5,772)
Other (f) 5,381 5,681
- ------------------------------------------------------------------------------------------------
Shareholders' equity under US GAAP 1,255,106 996,362
================================================================================================
</TABLE>
L Refers to pounds sterling
(a) ACQUISITION ACCOUNTING
Under UK GAAP, goodwill arising on acquisition prior to 1998 has been
eliminated directly against reserves. Under US GAAP, goodwill and other
intangible assets are capitalized and amortized by charges to the profit and
loss account over a period of 20 years. Under UK GAAP, goodwill arising in 1998
and in the future will be capitalized and amortized over a period not to exceed
20 years. During 1998, the Company revised the estimated lives of its intangible
assets to 20 years, reflecting a change in accounting estimate. Under UK GAAP,
certain integration-related amounts were expensed directly to the profit and
loss account. Under US GAAP, these integration costs were either capitalized as
goodwill, expensed directly to the current year profit and loss account, or will
be expensed to the profit and loss account in future years. The pounds sterling
36,091,000 adjustment to US GAAP net income includes pounds sterling 59,000,000
in goodwill and other intangible amortization offset by pounds sterling
22,909,000 in acquisition accounting differences.
F-19
<PAGE> 68
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 different
treatments of intangible assets under UK and US GAAP. Under UK GAAP, such
assets, which arose prior to 1998, have been written off directly to equity as
part of goodwill, and consequently are not reflected in current income. Certain
of these assets are being amortized for US tax purposes.
Under UK GAAP, certain recurring deferred tax benefits are required to be
written off, regardless of the profitability of the company. US GAAP amounts
reflect the full benefit for all deferred taxes as long as the company is
profitable.
(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 Company. 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 and the related tax implications are not recorded until formally
approved.
(e) LOANS OF EMPLOYEE STOCK OWNERSHIP PLANS
Under UK GAAP, loans of employee stock ownership plans which are guaranteed
by the Company are accounted for as loans secured by shares in the Company. US
GAAP requires such loans to be deducted from shareholders' equity.
(f) OTHER
Other adjustments include accounting differences relating to pension costs,
interval fund amortization, and deferred earn-out payments.
26. 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, 1998 and 1997. Since AIM subsidiaries
were acquired by the Company on February 28, 1997, and their results have been
included from March 1, 1997 (see Note 2), 1996 condensed consolidating financial
statements are not meaningful and, therefore, have not been presented.
F-20
<PAGE> 69
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
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed assets 206,523 1,159,244 600,246 (1,033,699) 932,314
Current assets 102,310 560,006 15,686 499 678,501
Creditors: amounts falling
due within one year (68,688) (419,528) (56,155) (90) (544,461)
Intercompany balances (118,540) (324,630) 443,170 -- --
Creditors: amounts falling
due after more than one year 1,658 (65,065) (671,977) -- (735,384)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS/(LIABILITIES) 123,263 910,027 330,970 (1,033,290) 330,970
===================================================================================================================================
CAPITAL AND RESERVES
Called up share capital 2,462 333 167,506 (2,795) 167,506
Share premium account 95,423 52,206 469,382 (147,629) 469,382
Profit and loss account 171,663 199,790 257,929 (371,453) 257,929
Other reserves (146,285) 657,698 (563,847) (511,413) (563,847)
- -----------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' FUNDS UNDER
UK GAAP 123,263 910,027 330,970 (1,033,290) 330,970
===================================================================================================================================
RECONCILIATION TO US
ACCOUNTING PRINCIPLES
US GAAP adjustments:
Acquisition accounting 58,631 963,623 1,022,254 1,022,254
Deferred taxation (2,658) 1,631 (1,027) (1,027)
Treasury stock -- -- (131,857) (131,857)
Dividends -- -- 31,694 31,694
Loans of employee stock
ownership plans (2,309) -- (2,309) (2,309)
Other 5,381 -- 5,381 5,381
- -----------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY UNDER US
GAAP 182,308 1,875,281 1,255,106 1,255,106
===================================================================================================================================
</TABLE>
L Refers to pounds sterling
F-21
<PAGE> 70
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
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1997 NON- CONSOLIDATED
GUARANTOR GUARANTOR AMVESCAP PLC ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES PARENT COMPANY ENTRIES TOTAL
L'000 L'000 L,000 L'000 L'000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed assets 187,959 305,564 251,601 (611,666) 133,458
Current assets 103,360 176,013 8,121 (104) 287,390
Creditors: amounts falling
due within one year (52,509) (109,491) (47,164) (4,807) (213,971)
Intercompany balances (141,215) 156,422 (15,207) -- --
Creditors: amounts falling
due after more than one year (10,378) (5,605) (218,813) 6,457 (228,339)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS/(LIABILITIES) 87,217 522,903 (21,462) (610,120) (21,462)
===================================================================================================================================
CAPITAL AND RESERVES
Called up share capital 2,511 311,004 148,855 (313,515) 148,855
Share premium account 81,797 (75,489) 157,365 (6,308) 157,365
Profit and loss account 131,951 131,743 214,418 (263,694) 214,418
Other reserves (129,042) 155,645 (542,100) (26,603) (542,100)
- -----------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' FUNDS UNDER
UK GAAP 87,217 522,903 (21,462) (610,120) (21,462)
===================================================================================================================================
RECONCILIATION TO US
ACCOUNTING PRINCIPLES
US GAAP adjustments:
Acquisition accounting 88,075 991,232 1,079,307 1,079,307
Deferred taxation (7,089) 2,325 (4,764) (4,764)
Treasury stock -- -- (82,138) (82,138)
Dividends -- -- 25,510 25,510
Loans of employee stock
ownership plans (5,772) -- (5,772) (5,772)
Other -- 5,681 5,681 5,681
- -----------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY UNDER US
GAAP 162,431 1,522,141 996,362 996,362
===================================================================================================================================
</TABLE>
L Refers to pounds sterling
F-22
<PAGE> 71
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF PROFIT AND LOSS
AND RECONCILIATION OF NET INCOME FROM UK TO US GAAP
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1998 NON- CONSOLIDATED
GUARANTOR GUARANTOR AMVESCAP PLC ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES PARENT COMPANY ENTRIES TOTAL
L'000 L'000 L,000 L'000 L'000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues 350,513 451,659 -- -- 802,172
Operating expenses (176,064) (437,369) (1,244) -- (614,677)
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 174,449 14,290 (1,244) -- 187,495
Other net (expense)/income (12,520) (61,715) 48,218 -- (26,017)
- -----------------------------------------------------------------------------------------------------------------------------------
Profit before taxation 161,929 (47,425) 46,974 -- 161,478
Taxation (37,451) (27,536) (2,386) -- (67,373)
- -----------------------------------------------------------------------------------------------------------------------------------
Profit for the financial year 124,478 (74,961) 44,588 -- 94,105
Share of profits of
subsidiaries 14,303 124,478 49,517 (188,298) --
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME UNDER UK
GAAP, (EQUITY METHOD) 138,781 49,517 94,105 (188,298) 94,105
RECONCILIATION TO US
ACCOUNTING PRINCIPLES
US GAAP adjustments:
Acquisition accounting (6,282) (29,809) (36,091) (36,091)
Taxation (28,824) 15,211 (13,613) (13,613)
Other (150) -- (150) (150)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME UNDER US GAAP 103,525 34,919 44,251 44,251
===================================================================================================================================
</TABLE>
L Refers to pounds sterling
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1997 NON- CONSOLIDATED
GUARANTOR GUARANTOR AMVESCAP PLC ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES PARENT COMPANY ENTRIES TOTAL
L'000 L'000 L,000 L'000 L'000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues 227,683 302,976 -- -- 530,659
Operating expenses (98,831) (241,384) (4,358) -- (344,573)
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 128,852 61,592 (4,358) -- 186,086
Other net (expense)/income (26,660) (21,726) 39,593 -- (8,793)
- -----------------------------------------------------------------------------------------------------------------------------------
Profit before taxation 102,192 39,866 35,235 -- 177,293
Taxation (33,768) (24,580) (1,931) -- (60,279)
- -----------------------------------------------------------------------------------------------------------------------------------
Profit for the financial year 68,424 15,286 33,304 -- 117,014
Share of profits of
subsidiaries 44,499 68,603 83,710 (196,812) --
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME UNDER UK
GAAP, (EQUITY METHOD) 112,923 83,889 117,014 (196,812) 117,014
RECONCILIATION TO US
ACCOUNTING PRINCIPLES
US GAAP adjustments:
Acquisition accounting (6,659) (37,837) (44,496) (44,496)
Taxation (802) (3,845) (4,647) (4,647)
Other -- 1,082 1,082 1,082
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME UNDER US GAAP 105,462 43,289 68,953 68,953
===================================================================================================================================
</TABLE>
L Refers to pounds sterling
F-23
<PAGE> 72
AMVESCAP PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1998 NON- CONSOLIDATED
GUARANTOR GUARANTOR AMVESCAP PLC ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES PARENT COMPANY ENTRIES TOTAL
L'000 L'000 L,000 L'000 L'000
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net cash inflow/(outflow) from
operating activities 183,300 12,178 (35,617) -- 159,861
Net cash (outflow)/inflow from
returns on investments and
servicing of finance (11,848) 52,078 62,821 (126,457) (23,406)
Taxation (37,469) (13,120) (9,522) -- (60,111)
Net cash (outflow)/inflow from
capital expenditure and
financial investment (27,212) 188,522 (234,660) -- (73,350)
Net cash inflow/(outflow)
related to acquisitions -- 89,344 (216,303) -- (126,959)
Dividends paid (99,825) (26,632) (44,410) 126,457 (44,410)
Net cash inflow/(outflow) from
management of liquid
resources 4,908 (38,741) -- -- (33,833)
Net cash (outflow)/inflow from
financing (10,500) (287,031) 473,213 -- 175,682
- --------------------------------------------------------------------------------------------------------
INCREASE/(DECREASE) IN
CASH 1,354 (23,402) (4,478) -- (26,526)
========================================================================================================
</TABLE>
L Refers to pounds sterling sterling
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1997 NON- CONSOLIDATED
GUARANTOR GUARANTOR AMVESCAP PLC ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES PARENT COMPANY ENTRIES TOTAL
L'000 L'000 L,000 L'000 L'000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net cash inflow/(outflow) from
operating activities 160,901 113,212 (40,113) -- 234,000
Net cash (outflow)/inflow from
returns on investments and
servicing of finance (25,728) 37,436 64,806 (85,712) (9,198)
Taxation (21,918) (28,309) (4,456) -- (54,683)
Net cash outflow from capital
expenditure and financial
investment (14,729) (9,740) (10,767) -- (35,236)
Net cash (outflow)/inflow
related to acquisitions -- (456,801) 119,392 -- (337,409)
Dividends paid (59,081) (26,631) (25,942) 85,712 (25,942)
Net cash inflow from
management of liquid
resources 28,685 126,677 -- -- 155,362
Net cash (outflow)/inflow from
financing (68,526) 307,309 (102,522) -- 136,261
- -----------------------------------------------------------------------------------------------------------------------------------
(DECREASE)/INCREASE IN
CASH (396) 63,153 398 -- 63,155
===================================================================================================================================
</TABLE>
L Refers to pounds sterling
F-24
<PAGE> 73
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, AMVESCAP PLC certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMVESCAP PLC
Date: March 29, 1999 By: /s/ Robert F. McCullough
----------------------------------
Robert F. McCullough
Chief Financial Officer
<PAGE> 74
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
3.2 Amendment No. 1, dated as of May 28, 1998, to Stock Purchase Agreement, dated as of
January 30, 1998, by and among the Company, AMD Acquisition Corp., Liechtenstein Global
Trust, AG and LGT Holding (International) AG, Zurich.
3.12 Waiver, dated as of September 29, 1998, regarding the Amended and Restated Transfer
Restriction Agreement, dated as of November 4, 1996, by and among the Company, 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.
3.28 Indenture, dated as of December 16, 1996, among LGT Asset Management, Inc., LGT Bank in
Liechtenstein Aktiengesellschaft, and Citibank, N.A.
3.29 Loan Agreement, dated December 14, 1995, between LGT BIL Ltd. And Bank in Liechtenstein
Aktiengesellschaft.
</TABLE>
<PAGE> 1
EXHIBIT 3.2
AMENDMENT NO. 1
TO THE
STOCK PURCHASE AGREEMENT
Amendment No. 1, dated as of May 28, 1998 (the "Amendment"), to the
Stock Purchase Agreement, dated as of January 30, 1998 (the "Purchase
Agreement"), among AMVESCAP PLC, a public limited company, incorporated under
the laws of England and Wales ("Buyer Parent"), AMD Acquisition Corp., a
Delaware corporation ("Buyer") and/or other Affiliate of Buyer designated by
Buyer in accordance with the Purchase Agreement as a purchaser thereunder of
shares of or interest in any of the Companies or the LGT Verwaltungs Interest
("Buyer Affiliates"), Liechtenstein Global Trust, AG, an Aktiengesellchschaft
organized under the laws of Liechtenstein ("LGT AG"), LGT Holding Luxembourg SA,
a Luxembourg Societe Anonyme ("LGT Luxembourg"), LGT Holding (International) AG,
Zurich, an Aktiengesellchschaft organized under the laws of Switzerland ("LGT
ZH") and LGT Bank in Liechtenstein (Cayman) Limited, a direct wholly-owned
subsidiary of LGT AG organized in the Cayman Islands (the "Cayman Islands
Seller").
Capitalized terms used herein without definition have the meanings
given thereto in the Purchase Agreement.
RECITALS
A. Buyer Parent, Buyer, LGT AG and LGT ZH have entered into the
Purchase Agreement.
B. LGT AG desires to transfer all of the issued and outstanding shares
of LGT Bank Cayman to the Cayman Islands Seller, prior to the sale and transfer
of the shares of LGT Bank Cayman to the Buyer Parent (the "Cayman Islands
Reorganization"), and the Buyer Parent desires to allow the Cayman Islands
Reorganization.
C. The parties desire to provide for the purchase by the Buyer Parent
and/or Buyer Affiliates of the Transferred Companies that are the direct
Subsidiaries of LGT Luxembourg in lieu of the purchase of all of the issued and
outstanding shares of LGT Luxembourg by the Buyer and/or Buyer affiliates.
D. The parties desire to amend the Purchase Agreement in certain other
respects, all as set forth in this Amendment.
<PAGE> 2
NOW, THEREFORE, the parties hereto hereby agree to amend and modify the
Purchase Agreement as follows:
1. Definitions. (a) The definitions of the following terms in the
Purchase Agreement are modified as set forth below:
The term "Agreement" shall mean the Purchase Agreement, as amended by
this Amendment, and as may be further amended, modified, supplemented or
restated from time to time. Each reference in the Purchase Agreement to
"this Agreement", "hereunder", "hereof" or words of like import referring
to the Purchase Agreement shall mean and be a reference to the Purchase
Agreement, as amended by this Amendment and as may be further amended,
modified, supplemented or restated from time to time.
The term "AVZ" shall mean AVZ, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Buyer Parent.
The definition of the term "Buyer Affiliates" shall include AVZ and
Buyer Parent. All references to Buyer Affiliates shall include AVZ in all
respects as if it was an original party to the Agreement.
The definition of the term "Companies" is hereby modified to exclude
LGT Luxembourg and to include the following Persons: (i) LGT Asset
Management (Pacific) Limited, a company limited by shares incorporated in
Hong Kong ("LGT Hong Kong"), (ii) LGT Asia Nies Japan Management SA., a
Luxembourg Societe Anonyme ("Asia Nies"), (iii) GT Europe Management SA.,
a Luxembourg Societe Anonyme ("GT Europe"), (iv) LGT Asset Management
Ltd., a limited company incorporated in Guernsey ("LGT Guernsey"), (v) GT
US Small Companies Management SA., a Luxembourg Societe Anonyme ("GT SC"),
(vi) GT Investment Management SA., a Luxembourg Societe Anonyme ("GT IM"),
(vii) LGT Asset Management Inc., a corporation incorporated in the State
of California ("LGT California"), (viii) LGT Bank in Liechtenstein
(Osterreich) AG, a stock company incorporated in Austria ("LGT Austria"),
and (ix) LGT Asset Management Holdings Ltd., a limited company
incorporated in Ireland ("LGT Ireland").
The definition of the term "Company Subsidiary" is hereby amended and
restated in its entirety to mean the direct or indirect Subsidiaries of
any and each Company,
2
<PAGE> 3
The definition of the term "Seller" is hereby modified to include LGT
Luxembourg and the Cayman Islands Seller.
The definition of the term "Shares" is hereby modified and restated in
its entirety to mean the UK Shares, the Cayman Shares, the LGT Verwaltungs
Interest, the LGT Hong Kong Shares, the Asia Nies Shares, the GT Europe
Shares, the LGT Guernsey Shares, the GT SC Shares, the GT IM Shares, the
LGT California Shares, the LGT Austria Shares and LGT Ireland Shares.
(b) The following terms, in lieu of the meanings given thereto in
Section 2.1 of the Purchase Agreement, shall have the meanings given thereto in
Section 2 of this Amendment: UK Shares; Cayman Shares; and LGT Verwaltungs
Shares.
2. Purchase and Sale of the Shares. Section 2.1 of the Purchase
Agreement is hereby modified so that in lieu of the sale by the Sellers and the
purchase by the Buyer or Buyer Affiliates of the interests in the Transferred
Companies therein, the Sellers shall sell and the Buyer Parent and the Buyer
Affiliates shall purchase the following, all upon the term and condition
otherwise contemplated in Section 2.1: (i) all of the issued and outstanding
ordinary shares, par value L1 per share, of LGT UK (the "UK Shares"), (ii) all
of the issued and outstanding shares, par value DM1 per share, of LGT Bank
Cayman (the "Cayman Shares"), (iii) all of the issued and outstanding ordinary
shares of LGT Hong Kong (the "LGT Hong Kong Shares"), (iv) all of the issued and
outstanding ordinary shares of Asia Nies (the "Asia Nies Shares"), (v) all of
the issued and outstanding ordinary shares of GT Europe (the "GT Europe
Shares"), (vi) all of the issued and outstanding ordinary shares of LGT Guernsey
(the "LGT Guernsey Shares"), (vii) all of the issued and outstanding ordinary
shares of GT SC (the "GT SC Shares"), (viii) all of the issued and outstanding
ordinary shares of GT IM (the "GT IM Shares"), (ix) all of the issued and
outstanding ordinary shares of LGT California (the "LGT California Shares"), (x)
all of the issued and outstanding ordinary shares of LGT Austria (the "LGT
Austria Shares"), (xi) 25% of the issued and outstanding shares of LGT Ireland
(the "LGT Ireland Shares"), and (xii) all of the equity interests in LGT
Verwaltungs (the "LGT Verwaltungs Interest").
3. Amendment to Section 2.3 Sections 2.3(a) and (b) of the Purchase
Agreement are amended and restated in their entirety as follows:
(a) (i) LGT AG shall deliver or shall cause the Cayman Islands Seller
to deliver to the Buyer Parent, free and clear of all Liens, all of the
Cayman Shares (accompanied by stock power duly executed in blank); (ii)
LGT AG shall deliver
3
<PAGE> 4
to the Buyer Parent, free and clear of all Liens, all of the UK Shares
(accompanied by stock power duly executed in blank); (iii) LGT AG shall
deliver or cause LGT Luxembourg to deliver to the Buyer Parent, free and
clear of all Liens, all of the UK Shares, Asia Nies Shares, GT Europe
Shares, GT IM Shares, GT SC Shares, LGT Austria Shares, LGT Guernsey
Shares, LGT Hong Kong Shares and LGT Ireland Shares, in each case
accompanies by duly executed stock power, stock transfer form or such
other instrument as may be appropriate to transfer ownership of such
Shares to the Buyer Parent; (iv) LGT AG shall deliver or shall cause LGT
ZH to deliver to the Buyer Parent such documents and instruments and to
take such other steps as may be necessary to effect the legal transfer of
all of the LGT Verwaltungs Interest, free and clear of all Liens; and (v)
LGT AG shall deliver or shall cause LGT Luxembourg to deliver to AVZ, free
and clear of all Liens, all of the LGT California Shares, accompanied by
stock powers duly executed in blank;
(b) The Sellers shall deliver or cause to be delivered to the Buyer
Parent (i) instruments evidencing the resignation of each director of
each Transferred Company and each officer of each Transferred Company
that is also an officer of LGT AG, (ii) an instrument evidencing the
resignation of Prince Philipp von und zu Liechtenstein as a partner of
LGT Bank in Liechtenstein & Co., Privatbankiers, Frankfurt ("LGT
Frankfurt"), and (iii) all certificates and other instruments and
documents which are expressly required pursuant to this Agreement to be
delivered by the Sellers to the Buyer at the Closing; and
4. Representations and Warranties. LGT AG represents and warrants to
the Buyer as follows, which representations and warranties shall be included in,
and be part of, Article III of the Agreement:
(a) Each Company is duly organized and validly existing under the laws
of its jurisdiction of organization and has the corporate or partnership power,
as the case may be, to carry on its business as now being conducted.
(b) LGT AG shall cause LGT California to deliver to Buyer and Buyer
Parent (i) a certification from LGT California, dated no more than 30 days prior
to the Closing Date and signed by a responsible corporate officer of LGT
California, that LGT California is not, and has not been at any time during the
five years preceding the date of such certification, a United States real
property holding company, as defined in section 897(c)(2) of the Code, and (ii)
proof reasonably satisfactory to the Buyer and Buyer Parent that LGT California
has provided notice of such certification to the Internal Revenue Service in
accordance with section 1.897-2(h)(2) of the Treasury Regulations prescribed
under the Code.
4
<PAGE> 5
(c) LGT Luxembourg is and, at all times since December 31, 1996 has
been, a pure holding company and has not engaged in any business or activity,
other than its ownership of the LGT Hong Kong Shares, Asia Nies Shares, GT
Europe Shares, LGT Guernsey Shares, GT SC Shares, GT IM Shares, LGT California
Shares, LGT Austria Shares and LGT Ireland Shares, and its investment in
Long-Term Capital Management, and activities related solely to such ownership
and investment. LGT Luxembourg does not own, hold or have any assets (whether
tangible or intangible, real or personal), other than its ownership of the LGT
Hong Kong Shares, Asia Nies Shares, GT Europe Shares, LGT Guernsey Shares, GT SC
Shares, GT IM Shares, LGT California Shares, LGT Austria Shares and LGT Ireland
Shares, and its investment in Long-Term Capital Management. The exclusion of LGT
Luxembourg as a Transferred Company will have no adverse impact on the continued
ability of the Transferred Companies to conduct operations as historically
conducted, whether from a regulatory, operating or other perspective.
5. Amendment and Restatement of Section 3.4. Section 3.4 of the
Purchase Agreement is hereby amended and restated in its entirety as follows:
3.4 Ownership of Shares and Equity Interest; Title. (a) As of the date
of this Agreement, LGT AG is the sole record and beneficial owner of the
UK Shares and the Cayman Shares and, as of the Closing Date, LGT AG will
be the sole record and beneficial owner of the UK Shares and the Cayman
Islands Seller will be the sole record and beneficial owner of the Cayman
Shares. As of the date of this Agreement, LGT AG has, and as of the
Closing Date, the Cayman Islands Seller will have and shall transfer to
Buyer Parent or Buyer Affiliates at the Closing, good title to the Cayman
Shares, except as (i) created by this Agreement and (ii) for restrictions
imposed by U.S. federal and state or non-U.S. securities laws. As of the
date of this Agreement, LGT AG has, and as of the Closing Date, will have
and shall transfer to the Buyer Parent or Buyer Affiliate at the Closing,
good titles to the UK Shares, and in the case of the UK Shares, with full
title guarantee for the purposes of the Law of Property (Miscellaneous
Provisions) Act of 1994, free and clear of any and all Liens, except (i)
as created by this Agreement and (ii) for restrictions imposed by U.S.
federal and state or non-U.S. securities laws.
(b) LGT Luxembourg is the sole record and beneficial owner of the LGT
Hong Kong Shares, the Asia Nies Shares, the GT Europe Shares, the LGT
Guernsey Shares, the GT SC Shares, the GT IM Shares, the LGT California
Shares, the LGT Austria Shares and the LGT Ireland Shares. LGT Luxembourg
has, and shall transfer to Buyer or Buyer Affiliates at the Closing, good
title to the
5
<PAGE> 6
LGT Hong Kong Shares, the Asia Nies Shares, the GT Europe Shares, the LGT
California Shares, the LGT Guernsey Shares, the GT SC Shares, the GT IM
Shares, the LGT Austria Shares and the LGT Ireland Shares, in each case
free and clear of any Liens, except (i) as created by this Agreement and
(ii) for restrictions imposed by U.S. federal and state or non-U.S.
securities laws.
(c) LGT ZH is the sole record and beneficial owner of the LGT
Verwaltungs Interest and shall transfer good title to the Verwaltungs
Interest to the Buyer Parent at the Closing, free and clear of any and all
Liens except (i) as created by this Agreement and (ii) for restrictions
imposed by U.S. federal and state or non-U.S. securities laws.
6. Cayman Islands Reorganization. Notwithstanding anything in Section
5.6 of the Purchase Agreement to the contrary, the Sellers may effect the Cayman
Islands Reorganization.
7. Schedules to Agreement. The parties agree and acknowledge that the
schedules attached hereto as Schedule I are the Schedules to the Purchase
Agreement.
8. Counterparts. Except as set forth expressly in this Amendment, all
of the terms of the Purchase Agreement shall be and remain in full force and
effect. This Amendment may be executed in two or more counterparts, each of
which shall be deemed to be an original and which together shall constitute one
and the same agreement.
9. Effectiveness. This Amendment will come into force and become
effective immediately prior to the Closing.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
AMVESCAP PLC
By: /s/ Robert F. McCullough
--------------------------------------------
Name: Robert F. McCullough
Title: Chief Financial Officer
By: /a/ A.D. Frazier
--------------------------------------------
Name: A.D. Frazier
Title: Director
AMD Acquisition Corp.
By: /s/ Robert E. McCullough
--------------------------------------------
Name: Robert F. McCullough
Title: Chief Financial Officer
Liechtenstein Global Trust, AG
By: /s/ Prinz Philipp von und zu Liechtenstein
--------------------------------------------
Name: Prinz Philipp von und zu
Liechtenstein
Title: Chairman
By: /s/ Konrad Bachinger
--------------------------------------------
Name: Konrad Bachinger
Title: Company Secretary
7
<PAGE> 8
LGT Holding Luxembourg S.A.
By: /s/ Prince Phillip /s/ Konrad Bachinger
-------------------------------------------
Name: Prince Philipp Konrad Bachinger
Title: Director
LGT Holding (International) AG, Zurich
By: /s/ Prince Philipp /s/ Konrad Bachinger
--------------------------------------------
Name: Prince Philipp Konrad Bachinger
Title: Director
LGT Bank in Liechtenstein (Cayman) Limited
By: /s/ Konrad Bachinger
--------------------------------------------
Name: Konrad Bachinger
Title: Director
8
<PAGE> 1
EXHIBIT 3.12
[AMVESCAP LETTERHEAD]
September 29, 1998
Amended and Restated Transfer Restriction Agreement
November 4, 1996
To the Persons Named
in the Transfer Restriction
Agreement Referred to Below:
Reference is made to the Amended and Restated Transfer Restriction
Agreement (the "Agreement") dated November 4, 1996 among AMVESCAP PLC,
formerly named INVESCO, PLC ("AMVESCAP") and the persons named therein.
Capitalized terms used herein without definition have the meanings given to
them in the Agreement.
Section 3(g) of the Agreement limits the Transfers of Ordinary Shares
permitted by such Section 3(g) only to Transfers of the Ordinary Shares received
upon the exercise of those Options that were unvested at the Effective Time.
AMVESCAP hereby waives the limitation in such Section 3(g) that limits
the applicability of such section to the Ordinary Shares received upon the
exercise of Options vested at the Effective Time. As a result of this waiver,
any Ordinary Shares received upon the exercise of Options vested at the
Effective Time may be Transferred pursuant to Section 3(g) to the same extent
that Ordinary Shares received upon the exercise of Options unvested at the
Effective Time may be Transferred pursuant to such Section 3(g).
Sincerely,
AMVESCAP PLC
By /s/ ROBERT F. MCCULLOUGH
---------------------------
Name: Robert F. McCullough
Chief Financial Officer
<PAGE> 1
EXHIBIT 3.28
- --------------------------------------------------------------------------------
LGT ASSET MANAGEMENT, INC.,
Issuer
LGT BANK IN LIECHTENSTEIN AKTIENGESELLSCHAFT,
Guarantor
and
CITIBANK, N.A.,
Trustee
-----------------------------
Indenture
Dated as of December 16, 1996
-----------------------------
US$150,000,000 6.875% Senior Notes due 2006
US$100,000,000 6.50% Senior Notes due 2001
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
RECITALS OF THE COMPANY
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
<S> <C> <C>
SECTION 1.1. Definitions............................................ 1
SECTION 1.2. Compliance Certificates and Opinions................... 11
SECTION 1.3. Form of Documents Delivered to Trustee................. 12
SECTION 1.4. Acts of Holders; Record Dates.......................... 12
SECTION 1.5. Notices, etc., to Trustee and Company and the
Guarantor............................................ 14
SECTION 1.6. Notice to Holders; Waiver.............................. 14
SECTION 1.7. Effect of Headings and Table of Contents............... 15
SECTION 1.8. Successors and Assigns................................. 15
SECTION 1.9. Separability Clause.................................... 15
SECTION 1.10. Benefits of Indenture.................................. 15
SECTION 1.11. Governing Law.......................................... 15
SECTION 1.12. Consent to Jurisdiction; Waiver of Immunities;
Judgment Currency.................................... 16
SECTION 1.13. Legal Holidays......................................... 17
SECTION 1.14. No Security Interest Created........................... 18
SECTION 1.15. Limitation on Individual Liability..................... 18
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally........................................ 19
SECTION 2.2. Securities Issuable in Global Form..................... 19
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms........................................ 22
SECTION 3.2. Denominations.......................................... 23
SECTION 3.3. Execution, Authentication, Delivery and Dating......... 23
SECTION 3.4. Temporary Securities................................... 24
SECTION 3.5. Registration, Registration of Transfer and Exchange.... 24
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities....... 26
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 3.7. Payment of Interest; Interest Rights
Preserved ............................................. 27
SECTION 3.8. Persons Deemed Owners .................................. 29
SECTION 3.9. Cancellation ........................................... 29
SECTION 3.10. Computation of Interest ................................ 29
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture ................ 30
SECTION 4.2. Application of Trust Money ............................. 31
SECTION 4.3. Reinstatement .......................................... 31
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default ...................................... 32
SECTION 5.2. Acceleration of Maturity; Rescission and
Annulment .............................................. 34
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee ................................ 35
SECTION 5.4. Trustee May File Proofs of Claim ....................... 36
SECTION 5.5. Trustee May Enforce Claims Without
Possession of Securities .............................. 37
SECTION 5.6. Application of Money Collected ......................... 37
SECTION 5.7. Limitation on Suits .................................... 38
SECTION 5.8. Unconditional Right of Holders to Receive
Principal and Interest ................................ 38
SECTION 5.9. Restoration of Rights and Remedies ..................... 39
SECTION 5.10. Rights and Remedies Cumulative ......................... 39
SECTION 5.11. Delay or Omission Not Waiver ........................... 39
SECTION 5.12. Control by Holders ..................................... 39
SECTION 5.13. Waiver of Past Defaults ................................ 40
SECTION 5.14. Waiver of Stay or Extension Laws ....................... 40
SECTION 5.15. Undertaking for Costs .................................. 41
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Notice of Defaults ..................................... 41
SECTION 6.2. Certain Rights of Trustee .............................. 41
SECTION 6.3. Trustee Not Responsible for Recitals or
Issuance of Securities ................................ 43
SECTION 6.4. May Hold Securities .................................... 43
SECTION 6.5. Money Held in Trust .................................... 43
SECTION 6.6. Compensation and Reimbursement ......................... 43
</TABLE>
ii
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<TABLE>
<S> <C> <C>
SECTION 6.7. Corporate Trustee Required; Eligibility;
Conflicting Interests.............................. 45
SECTION 6.8. Resignation and Removal; Appointment of
Successor.......................................... 45
SECTION 6.9. Acceptance of Appointment by Successor.............. 47
SECTION 6.10. Merger, Conversion, Consolidation or
Succession to Business............................. 48
SECTION 6.11. Preferential Collection of Claims Against
Company............................................ 49
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. Disclosure of Names and Addresses of
Holders............................................ 49
SECTION 7.2. Reports by Trustee.................................. 49
SECTION 7.3. Reports by Company and Guarantor.................... 49
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company and Guarantor May Consolidate,
etc., Only on Certain Terms........................ 51
SECTION 8.2. Successor Person Substituted........................ 52
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent
of Holder......................................... 52
SECTION 9.2. Supplemental Indentures with Consent of
Holders........................................... 53
SECTION 9.3. Execution of Supplemental Indentures............... 54
SECTION 9.4. Effect of Supplemental Indentures.................. 54
SECTION 9.5. Conformity with Trust Indenture.................... 55
SECTION 9.6. Reference in Securities to Supplemental
Indentures........................................ 55
SECTION 9.7. Notice of Supplemental Indentures.................. 55
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal and Interest................. 55
SECTION 10.2. Maintenance of Office or Agency................... 55
SECTION 10.3. Money for Security Payments to Be Held in Trust... 56
SECTION 10.4. Statement As to Compliance........................ 58
SECTION 10.5. Existence......................................... 58
SECTION 10.6. Limitation on Liens............................... 58
ARTICLE XI
REDEMPTION
SECTION 11.1. Redemption........................................ 59
SECTION 11.2. Tax Redemption.................................... 59
ARTICLE XII
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 12.1. Company's Option to Effect Defeasance or
Covenant Defeasance............................. 60
SECTION 12.2. Defeasance and Discharge.......................... 60
SECTION 12.3. Covenant Defeasance............................... 60
SECTION 12.4. Conditions to Defeasance or Covenant Defeasance... 61
SECTION 12.5. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other
Miscellaneous Provisions.......................... 63
SECTION 12.6. Reinstatement..................................... 64
ARTICLE XIII
GUARANTEE
SECTION 13.1. Guarantee......................................... 65
SECTION 13.2. Execution and Delivery of Guarantees.............. 67
</TABLE>
Annex A - Form of Security and Guarantee
Annex B - Transferee Letter of Representation
Annex C - Form of Certificate of Transfer
iv
<PAGE> 6
INDENTURE, dated as December __, 1996 between LGT ASSET MANAGEMENT,
INC., a California corporation (herein called the "Company"), having its
principal office at 1166 Avenue of the Americas, New York New York, LGT BANK IN
LIECHTENSTEIN AKTIENGESELLSCHAFT, a bank organized under the laws of
Liechtenstein (the "Guarantor") having its principal office at Herengasse 12,
FL-9490 Vaduz Liechtenstein and CITIBANK, N,A., a national banking association,
Trustee (herein called the "Trustee") having its principal corporate trust
office at 120 Wall Street, New York, New York.
RECITALS OF THE COMPANY
The Company has duly authorized the creation of two series of
securities comprised of the __% Senior Notes due 2006 and the __% Senior Notes
due 2001 (herein collectively called the "Securities"), of substantially the
tenor and amount hereinafter set forth, and to provide therefor the Company has
duly authorized the execution and delivery of this Indenture.
The Guarantor desires to make the Guarantees provided herein and the
Guarantor has duly authorized the execution and delivery of this Indenture.
All things necessary have been done to make the Notes, when executed by
the Company and the Guarantees, when executed by the Guarantor and authenticated
and delivered hereunder and duly issued by the Company and the Guarantor, the
valid obligations of the Company and the Guarantor and to make this Indenture a
valid agreement of the Company and the Guarantor, in accordance with their and
its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
<PAGE> 7
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect
to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted at the date of such
computation; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified
in Section 1.4.
"Additional Amounts" has the meaning specified in Section 13.1.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Board of Directors" means either the board of directors of the Company
or the Guarantor or any duly authorized committee of either such board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or the Guarantor, as
applicable, to have been duly adopted by the relevant Board of Directors and to
be in full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking
2
<PAGE> 8
institutions in The City of New York are authorized or obligated by law or
executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interest, participations, rights in or other equivalents (however designated) of
such Person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable or
convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation under any lease of
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
finance lease obligation under GAAP, and, for the purpose of this Indenture, the
amount of such obligation at any date shall be the capitalized amount thereof at
such date, determined in accordance with GAAP.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Company" means the Person named an the "Company" in the first
paragraph of this Indenture, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of (i) the Company by any two of its Chairman, its President
or a Vice President, its Treasurer or its Company Secretary or any of their
respective powers of attorney or (ii) the Guarantor by any two of its duly
authorized officers, and delivered to the Trustee.
"Consolidated Net Tangible Assets" at any time, means the excess over
current liabilities of all assets, less goodwill, trademarks, patents, other
like intangibles and the minority interest of others in Subsidiaries, of the
Company and its consolidated Subsidiaries, determined on a consolidated basis in
accordance with GAAP, as of end of the most recently completed accounting period
of the Company for which financial information is then available.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee, at which at any particular time its corporate trust business shall
be administered, which office at the date of execution of this Indenture is
located at 120 Wall
3
<PAGE> 9
Street, 13th Floor, New York, New York 10043, except that for purposes of
presentation of the Securities for payment or registration of transfer or
exchange, such term means the office or agency of the Trustee at which at any
particular time the corporate agency business of the Trustee shall be conducted,
which office at the date of execution of this Indenture is located at 111 Wall
Street, 5th Floor, New York, New York 10043.
"corporation" includes corporations, associations, companies and
business trusts.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depository" has the meaning specified in Section 2.2(a).
"Director" means any member of either Board of Directors.
"European Economic Area" means the free trade zone among the fifteen
European Union member states and the two European Free Trade Association
countries.
"European Union" means a country which, as of the date of this
Indenture, has acceded to the Treaty on European Union, (effective November 1,
1993).
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations thereunder.
"Fair Market Value" means, with respect to any asset, the price which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of which is under pressure
or compulsion to complete the transaction.
"GAAP" means, unless otherwise specified in this Indenture, generally
accepted accounting principles in the United States, as applied from time to
time by the Company in the preparation of its consolidated financial statements.
"Global Security" has the meaning specified in Section 2.2(a).
4
<PAGE> 10
"guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation or (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance of all or any part of such obligation, including, without limiting
the foregoing, the payment of amounts drawn down by letters of credit.
"Guarantee" means a guarantee to be provided by the Guarantor pursuant
to Article XIII, substantially in the form of Annex A.
"Guarantor" means the party named as such above or any successor
thereto.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all liabilities of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities incurred in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of such
Person in connection with any letter of credit, bankers' acceptance or other
similar credit transaction and in connection with any agreement to purchase,
redeem, exchange, convert or otherwise acquire for value any Capital Stock of
such Person, or any warrants, rights or options to acquire such Capital Stock,
now or hereafter outstanding, if, and to the extent, any of the foregoing would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, (b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, if, and to the extent, any of the
foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (c) all indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (d) all Capitalized Lease
Obligations of such Person, (e) all Indebtedness referred to in the preceding
clauses of other Persons and all dividends of other Persons, the payment of
which is secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable
5
<PAGE> 11
for the payment of such Indebtedness (the amount of such obligation being deemed
to be the lesser of the Fair Market Value of such property or asset or the
amount of the obligation so secured), (f) all guarantees by such Person of
Indebtedness referred to in this definition, (g) all Redeemable Capital Stock of
such Person valued at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued dividends, (h) all obligations of such Person
under or in respect of currency exchange contracts and Interest Rate Protection
Obligations of such person, and (i) any amendment, supplement, modification,
deferral, renewal, extension or refunding of any liability of such Person of the
types referred to in clauses (a) through (h) above. For purposes hereof, the
"maximum fixed repurchase price" of any Redeemable Capital Stock which does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to this Indenture, and if such price is based upon, or measured by, the
Fair Market Value of such Redeemable Capital Stock, such Fair Market Value shall
be determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock. The amount of Indebtedness of any Person at any date
shall be, with respect to unconditional obligations, the outstanding balance at
such date of all such obligations as described above; provided that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the face amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time as determined
in conformity with GAAP.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Interest Rate Protection Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include without limitation, interest rate swaps, caps,
floors, collars and similar agreements.
6
<PAGE> 12
"Lien" means any pledge, mortgage, lien, charge, encumbrance or
security interest of any kind.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the stated Maturity or by
declaration of acceleration, notice of redemption, notice of option to elect
repayment or otherwise.
"Officers' Certificate", means a certificate signed by, in the case of
the Company, any two of the Company's Chairman, its Vice Chairman, the President
or a Vice President, its Chief Financial Officer, its Treasurer or its Company
Secretary or, in the case of the Guarantor, any two of the Guarantor's duly
authorized officers.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company or the Guarantor, as the case may be, including an
employee of the Company or the Guarantor, and who shall be acceptable to the
Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company, the Guarantor or any
of their respective Affiliates) in trust or set aside and segregated in
trust by the Company, the Guarantor or any of their respective Affiliates
(if the Company, the Guarantor or any of their respective Affiliates shall
act as Paying Agent) for the Holders of such Securities; provided, however,
that if such Securities or portions thereof are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture, or
provision therefor satisfactory, to such Trustee has been made;
(iii) Securities, except to the extent provided in Section 12.2, with
respect to which the Company has effected defeasance as provided in Article
Twelve; and
(iv) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indepture, other than any such Securities in
respect of
7
<PAGE> 13
which there shall have been presented to the Trustee proof satisfactory to
it that such Securities are held by a bona fide purchaser in whose hands
the Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Securities owned
by the Company, the Guarantor or any other obligor upon the Securities or any
Affiliate of the Company or the Guarantor or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in making such calculation or in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company, the Guarantor or any other obligor upon the
Securities or any Affiliate of the Company or the Guarantor or such other
obligor.
"Paying Agent" means any Person (including the Company or the Guarantor
acting as Paying Agent) authorized by the Company to pay the principal of or
interest on any Securities on behalf of the Company.
"Permitted Liens" means (a) Liens in favor of the Company or a
Subsidiary of the Company or in favor of the Guarantor or a Subsidiary of the
Guarantor; (b) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any Subsidiary of the
Company; provided that such Liens were not incurred in connection with or in
anticipation of such merger or consolidation and do not extend to any assets
other than those of the Person merged with or into or consolidated with the
Company; (c) Liens on property acquired, constructed or improved by the Company
or any Subsidiary after the date of this Indenture which exist at the date of
acquisition or are created within 180 days after such acquisition, construction,
or improvement to secure or provide for the payment of any part of the purchase
price or cost thereof, provided that such Liens not apply to any property
theretofore owned by the Company or any Subsidiary other than, in the case of
any construction or improvement, the property so constructed or improved; (d)
Liens existing on the date of the Indenture; (e) Liens securing Indebtedness
incurred by the Company or any Subsidiary solely to pay brokers' commissions in
connection with the sale of Class B Shares of mutual funds offered by the
Company or its Subsidiaries or in connection with
8
<PAGE> 14
the sale of shares of closed end mutual funds, in each case, so long as the
Liens do not extend to any assets other than amounts receivable with respect to
such sales; (f) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Lien referred to in the
foregoing clauses (a) through (e), so long as the principal amount of any
Indebtedness secured thereby does not exceed the principal amount of the
Indebtedness subject to the Lien which is extended, renewed or replaced and so
long as the amount of property or assets subject to such Lien is not increased
thereby; and (g) Liens securing other Indebtedness that does not exceed 15% of
the Company's Consolidated Net Tangible Assets at the end of the most recently
completed fiscal period.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where, subject to the provisions of Section
10.2, the principal of and interest on the Securities of that series are payable
as specified in this Indenture and such Securities.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for a mutilated
security or in lieu of a lost, destroyed or stolen Security shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Security.
"Redeemable Capital Stock" means any class or series of Capital Stock
that, either by its terms, by the terms of any security into which it is
convertible or exchangeable or by contract or otherwise, is, or upon the
happening of an event or passage of time would be, required to be redeemed prior
to the final Stated Maturity of the Securities of any series or is redeemable at
the option of the holder thereof at any time prior to such final Stated
Maturity, or is convertible into or exchangeable for debt securities at any time
prior to such final Stated Maturity.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the _____________ or _______________ (whether or not a
9
<PAGE> 15
Business Day), as the case may be next preceding such Interest Payment Date.
"Responsible Officer", when used with respect to the Trustee, means any
officer of the Trustee with direct responsibility for the administration of the
Indenture, and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
"Significant Subsidiary" has the meaning defined in Rule 1-02 of
Regulation S-X.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which at the time of determination such Person, directly and/or indirectly
through one or more Subsidiaries, owns more than 50% of the Voting Stock and
(ii) any other Person (other than a corporation), including, without limitation,
a joint venture, in which such Person, one or more Subsidiaries thereof or such
Person and one or more Subsidiaries thereof, directly or indirectly, at the time
of determination thereof, has at least majority ownership interest entitled to
vote in the election of directors, managers or trustees thereof (or other
Person performing similar functions).
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force at the date as of which this Indenture was executed.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of
10
<PAGE> 16
this Indenture, and thereafter "Trustee," shall mean such successor Trustee.
"United States" or "U.S." means the United States of America (including
the States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"Voting Stock" means stock of the class or classes having general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of a corporation (irrespective of
whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).
SECTION 1.2. Compliance Certificates and Opinions.
Upon any application or request by the Company or the Guarantor to the
Trustee to take any action under any provision of this Indenture, the Company or
the Guarantor shall furnish to the Trustee an Officers' Certificate stating that
all conditions precedent, if any, provided for in this Indenture (including any
covenant compliance with which constitutes a condition precedent) relating to
the proposed action have been complied with and an opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than pursuant to
Section 10.4) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
11
<PAGE> 17
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.3. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company or the
Guarantor may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company or the Guarantor stating chat the information with respect to such
factual matters is in the possession of the Company or the Guarantor, unless
such counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders; Record Dates.
(a) 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; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company or the
Guarantor, or both of them. 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
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writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee, the Company and the Guarantor,
if made in the manner provided in this Section.
(b) 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 other manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Securities held by any
Person, and the date of holding the same, shall be proved by the Security
Register.
(d) If the Company shall solicit from the Holders of Securities any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 30 days
prior to the first solicitation of Holders generally in connection therewith and
not later than the date such solicitation is completed. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the outstanding Securities shall be computed as of
such record date; provided that no such authorization, agreement or consent by
the Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than eleven
months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company or the Guarantor in reliance thereon, whether or not notation of such
action is made upon such Security.
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SECTION 1.5. Notices, etc., to Trustee and Company and the Guarantor.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company or the Guarantor shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Agency and Trust, or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed
to it at the address of its principal office specified in the first
paragraph of this Indenture, or at any other address previously furnished
in writing to the Trustee by the Company, or
(3) the Guarantor by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Guarantor at the
following address:
LGT Bank in Liechtenstein Aktiengesellschaft
Herengasse 12
FL-9490 Vaduz
Principality of Liechtenstein
Att: Legal Department
or at any other address previously furnished in writing to the Trustee by
the Guarantor.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders by the
Company, the Guarantor or the Trustee, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by
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such Holder, whether or not such Holder actually receives such notice. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
SECTION 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.8. Successors and Assigns.
All covenants and agreements in this Indenture by each of the Company
and the Guarantor shall bind the successors and assigns of the Company and the
Guarantor, respectively, whether so expressed or not.
SECTION 1.9. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 1.10 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto, any Paying Agent, any
Securities Registrar and their successors hereunder and the Holders, any benefit
or any legal or equitable right, remedy or claim under this Indenture.
SECTION 1.11 Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York without regard to principles of
conflicts of law. The parties hereto agree that this Indenture shall be subject
to the provisions of the Trust Indenture Act that are required to be
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part of an indenture to be qualified under the Trust Indenture Act and shall be
governed by such provisions to the extent provided herein.
SECTION 1.12. Consent to Jurisdiction; Waiver of Immunities; Judgment
Currency.
(a) The Company and the Guarantor hereby irrevocably submit to the
non-exclusive jurisdiction of any New York state or federal court sitting in
New York City in any suit, action or proceeding arising out of or relating to
this Indenture or any Securities, and the company and the Guarantor hereby
irrevocably agree that all claims in respect of such suit, action or proceeding
may be heard and determined in such New York state or federal court. The
Company and the Guarantor hereby irrevocably waive, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such suit action or proceeding and any objection to such suit, action or
proceeding whether on the grounds of venue, residence or domicile.
(b) The Guarantor hereby irrevocably appoints CT Corporation System,
with an office on the date hereof at 1633 Broadway, New York, New York 10019,
United States (the "Procega Agent") as its agent to receive, on behalf of itself
and its property, service of copies of the summons and complaint and any other
process which may be served in any such suit, action or proceeding brought in
such New York state or federal court sitting in New York City. Such service may
be made by mailing or delivering a copy of such process to the Guarantor in care
of the Process Agent at the address specified above. The Guarantor hereby
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. Failure of the Process Agent to give notice to the Guarantor or
failure of the Guarantor to receive notice of such service of process shall not
affect in any way the validity of such service on the Process Agent or the
Guarantor. As an alternative method of service, the Guarantor also irrevocably
consents to the service of any and all process in any such suit, action or
proceeding in such New York state or federal court sitting in New York City by
the mailing of copies of such process to the Guarantor at its address specified
in the first paragraph of this Indenture or at any other address previously
furnished in writing by the Guarantor to the Trustee. The Guarantor covenants
and agrees that it shall take any and all reasonable action, including the
execution and filing of any and all documents, that may be necessary to continue
the designation of the Process Agent above in full force and effect, and to
cause the Process Agent to continue to act as such. Nothing in this paragraph or
in this Section shall obviate the requirement that the Trustee or a Holder
provide the Guarantor with a notice of required payment on the Guarantees as
provided in Section 13.1 hereof.
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(c) Nothing in this Section shall affect the right of any party to
serve legal process in any other manner permitted by law or affect the right of
any party to bring any action or proceeding against any other party or its
property in the courts of other jurisdictions.
(d) To the extent that the Company or the Guarantor has or hereafter
may acquire any immunity (sovereign or otherwise) from jurisdiction of any court
or from any legal process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, the Company and the Guarantor hereby
irrevocably waive such immunity in respect of its obligations under this
Indenture or the Securities.
(e) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due under the Securities or the Guarantees in United
States dollars into another currency, the Guarantor agrees, to the fullest
extent permitted by law, that the rate of exchange used shall be that at which,
in accordance with normal procedures, United States dollars could be purchased
with such other currency on the Business Day (in the place where such judgment
is rendered) preceding that on which final judgment is given.
The obligation of the Company or Guarantor in respect of any sum due
from it under the Securities or the Guarantees shall, notwithstanding any
judgment in a currency other than United States dollars, be discharged only to
the extent that, on the day of payment by the Company or the Guarantor of any
sum adjudged to be so due in such other currency, Holders could in accordance
with normal procedures purchase United States dollars with such other currency;
if the United States dollars so purchased are less than the sum originally due
to such Holders in United States dollars, the Guarantor agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify such Holders
against such loss, and if the United States dollars so purchased exceed the sum
originally due to such Holders in United States dollars, such Holders shall
remit to the Guarantor such excess.
SECTION 1.13. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity or Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made
on the Interest Payment Date or Redemption Date or at the Stated Maturity or
Maturity; provided that no interest shall accrue for
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the period from and after such Interest Payment Date, Redemption Date, Stated
Maturity or Maturity, as the case may be.
SECTION 1.14. No Security Interest Created.
Except as provided in Section 6.6, nothing in this Indenture or in the
Securities, express or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect in any jurisdiction where property of the
Company or its Subsidiaries is or may be located.
SECTION 1.15. Limitation on Individual Liability.
No recourse under or upon any obligation, covenant or agreement
contained in this Indenture or in any Security, or for any claim based thereon
or otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or the Guarantor or any successor corporation, either directly or
through the Company or the Guarantor, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the obligations
issued hereunder are solely corporate obligations, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers or directors, as such, of the Company or
the Guarantor or any successor Person, or any of them, because of the creation
of the indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any Security or
implied therefrom; and that any and all such personal liability of every name
and nature, either at common law or in equity or by constitution or statute, of,
and any and all such rights and claims against,every such incorporator,
stockholder, officer or director, as such, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any Security or
implied therefrom, are hereby expressly waived and released as a condition of,
and as a consideration for, the execution of this Indenture and the issuance of
such Security and the Guarantee endorsed thereon.
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ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities of each series, the Guarantees with respect thereto and
the Trustee's certificate of authentication shall be in substantially the form
annexed hereto as Annex A, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities. Any portion of the text of any Security may be set
forth on the reverse thereof, with an appropriate reference thereto on the face
of the Security.
The definitive Securities and Guarantees shall be printed, lithographed
or engraved on steel-engraved borders or may be produced in any other manner,
all as determined by the officers of the Company and the Guarantor executing
such Securities and Guarantees, as evidenced by their execution of such
Securities and Guarantees. Unless required by the Depository or any rule,
regulation or law, Securities issued in the form of Global Securities need not
be printed, lithographed or engraved on steel engraved borders, but shall be in
such form as is acceptable to the Depository.
The terms and provisions contained in the form of the Securities
annexed hereto as Annex A shall constitute, and are hereby expressly made, a
part of this Indenture. To the extent applicable, the Company, the Guarantor and
the Trustee, by their execution and delivery of this Indenture, expressly agree
to such terms and provisions and to be bound thereby.
SECTION 2.2. Securities Issuable in Global Form.
(a) If so specified in the Company Order referred to in Section 3.3,
all or a portion of the Securities of each series sold in reliance on Rule 144A
under the Securities Act may be issued in the form of one or more permanent
global Securities for such series (each, a "144A Global Security"), and all or a
portion of the original Securities sold in reliance on Regulation S under the
Securities Act may be issued in the form of one or more permanent global
Securities (the "Regulation S Global Securities", and, together with the 144A
Global Securities, the "Global Securities") registered in the name of a
Securities depository (the "Depository") or its nominee representing all or a
portion of the Outstanding Securities of such series. Such
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Global Securities shall be substantially in the form and shall bear the legends,
if applicable, set forth in Annex A hereto with such modifications as may be
necessary or desirable to reflect the issuance thereof in global form. To
reflect increases and decreases thereof the aggregate principal amount of each
Global Security may be increased or decreased from time to time by adjustments
made on the records of the Trustee as custodian for the Depository, in
accordance with the procedures of the Depository.
(b) Subject to the provisions of Section 3.3 and, if applicable,
Section 3.4, the Trustee shall deliver and redeliver any Security in permanent
global form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 3.3 or Section 3.4 has been, or simultaneously is,
delivered, any instructions by the Company with respect to endorsement or
delivery or redelivery of a Security in global form shall be in writing but need
not comply with Section 1.2 and need not be accompanied by an Opinion of
Counsel.
(c) Notwithstanding the provisions of Section 3.7, payment of principal
of and interest on any Security in global form shall be made to the Person or
Persons specified therein. Notwithstanding the provisions of Section 3.9 and
except as provided in the preceding sentence, the Company, the Guarantor, the
Trustee and any agent of the Company, the Guarantor and the Trustee shall treat
the Holder of any permanent global Security as the owner of such Security for
the purpose of receiving payment of principal of and (subject to Sections 3.5
and 3.7) interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and none of the Company, the Guarantor
the Trustee or any agent of the Company, the Guarantor or the Trustee shall be
affected by notice to the contrary.
(d) If at any time, (i) the Depository notifies the Company that it is
unwilling or unable to continue as Depository with respect to any series of
Securities or if at any time the Depository shall no longer be a "clearing
agency" registered or in good standing under the Exchange Act or other
applicable statute or regulation and a successor Depository is not appointed by
the company within 90 days after the Company receives such notice or becomes
aware of such condition, as the case may be, (ii) the Company determines that
the Securities of any series shall no longer be represented by a global Security
or Securities and that the provisions of this Section 2.2 shall no longer apply
to the Securities of such series, (iii) any Event of Default with respect to any
series of Securities shall have occurred and be continuing or (iv) a request for
certificates is made by a Holder of a beneficial interest in a Global Security
in connection with a transfer of such interest to an institutional accredited
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investor, then in such event this Section 2.2 shall no longer be applicable to
the Securities (or portion thereof) of such series and the Company and the
Guarantor will execute and the Trustee, upon Company Request, will authenticate
and deliver Securities of such series with Guarantees endorsed thereon in
definitive registered form, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the global Security or
Securities for such series (or the portion being so transferred to an
institutional accredited investor) of Securities in exchange for such global
Security whereupon the global Security or Securities for such series of
Securities shall be endorsed to reflect the principal amount so transferred to
an institutional accredited investor or, in the case of an event described in
clauses (i), (ii) or (iii) of this paragraph, cancelled by the Trustee. The
Securities of any series in definitive registered form issued in exchange for
the global Security or Securities for such series pursuant to this Section
2.2(d) shall be registered in such names and issued in such authorized
denominations as the Depository, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall make available for delivery such Securities to the Persons in whose names
such Securities are so registered.
(e) (i) In the event an institutional accredited investor subsequently
transfers a Security in definitive registered form to a Person for whom the
Depository is eligible to act in accordance with the rules and regulations of
the Depository, as such rules and regulations may from time to time be amended,
and such Person notifies the Trustee in writing that such Person wishes to hold
its Security through the Depository, the Trustee shall, upon surrender to the
Trustee of such Security in definitive registered form, (i) cancel such Security
in definitive registered form and (ii) reflect an increase in the aggregate
principal amount of the applicable 144A Global Security or Regulation S Global
Security, as the case may be, by adjusting the records of the Trustee (which
records shall be conclusive as to any determination of the aggregate outstanding
amount of any Global Security), upon written instructions to the Trustee from
the Company, as custodian for the Depository, in accordance with the procedures
of the Depository.
(ii) In the event that an institutional accredited investor
subsequently transfers a Security in definitive registered form to another
institutional accredited investor, the Trustee shall effect such transfer in
accordance with Section 3.5.
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ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms. The aggregate principal amount of each
series of the __% Senior Notes due 2006 and the __% Senior Notes due 2001 which
may be authenticated and delivered under this Indenture is limited to
$150,000,000 and $100,000,000, respectively, except for Securities of a series
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities of such series pursuant to Section 2.5,
3.4, 3.5, 3.6 or 9.6.
The Securities of each series shall be known and designated,
respectively, as the "__% Senior Notes due 2006" and the "__% Senior Notes due
2001" of the Company. Their Stated Maturity shall be as set forth in the
Securities and they shall bear interest at the rate per annum set forth in the
Securities from __________, or from the most recent Interest Payment Date to
which internet has been paid or duly provided for, payable on ____________ and
semiannually thereafter on __________ and in each year and at said Stated
Maturity, until the principal thereof is paid or duly provided for. All
amounts payable in respect of the securities shall be made in United states
dollars.
The principal of and interest on the Securities shall be payable (i) in
respect of Securities held of record by the Depository or its nominee in the
manner required by the Depository and (ii) in respect of Securities held of
record by Holders other than the Depository or its nominee at the office or
agency of the Company maintained for such purpose in The City of New York, or at
such other office or agency of the Company as may be maintained for such
purpose, in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that, in the case of a Security other than a Global Security, at the
option of the Company, interest may be paid by check mailed to addresses of the
Persons entitled thereto as such addresses shall appear on the Security
Register.
The Securities, in whole or any specified part, shall be defeasible
pursuant to Section 12.2 or Section 12.3 or both such Sections.
Except as may be otherwise provided for by Section 3.5, the Securities
shall be issuable in the form of one or more Global Securities, shall bear the
legend specified in Annex A and shall be registered in the name of The
Depository Trust Company or its nominee, as Depository.
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SECTION 3.2. Denominations.
The Securities, having the Guarantees endorsed thereon, shall be
issuable only in registered form without coupons and only in denominations of
$1,000 and any multiple of $1,000 in excess thereof, except that Securities
shall be issuable to an institutional accredited investor only in denominations
of $250,000 and any multiple of $1,000 in excess thereof,
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by any of its
Chairman, its Vice Chairman, its Treasurer, or any Vice President, attested by
its Company Secretary. The signature of any of these officers on the Securities
may be manual or facsimile signatures of the present or any future such
authorized officer and may be imprinted or otherwise reproduced on the
Securities.
Securities or Guarantees bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company or the
Guarantor shall bind the Company or the Guarantor, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities having endorsed thereon
Guarantees or did not hold such offices at the date of such Securities or
Guarantees.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company
having endorsed thereon Guarantees to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such Securities and
Guarantees endorsed thereon, and the Trustee in accordance with such Company
Order shall authenticate and make available for delivery such Securities.
Each Security shall be dated the date of its authentication.
No Security, including any Guarantee annexed thereto, shall be entitled
to any benefit under this Indenture or be valid or obligatory for any purpose
unless there appears on such Security a certificate of authentication
substantially in the form provided for herein duly executed by the Trustee by
manual signature of an authorized signatory, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.
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Reference is made to Section 13.2 concerning the execution and delivery
of the Guarantees.
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities of a series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
make available for delivery, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.
If temporary Securities of a series are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 10.2, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute
and the Trustee shall authenticate and make available for delivery in exchange
therefor a like principal amount of definitive Securities of the same series of
authorized denominations. Until so exchanged, the temporary Securities shall in
all respects be entitled to the same benefits under this Indenture as definitive
Securities.
SECTION 3.5. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register for each series of securities (the registers maintained in
such office and in any other office or agency designated pursuant to Section
10.2 being herein sometimes referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities, The
Security Register shall be in written form or any other form capable of being
converted into written form within a reasonable time. At all reasonable times,
the Security Register shall be open to inspection by the Trustee. The Trustee is
hereby initially appointed as security registrar (the "Security Registrar") for
the purpose of registering securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security of any
series at the office or agency of the Company designated pursuant to Section
10.2, the Company shall execute,
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and the Trustee shall authenticate and make available for delivery, in the name
of the designated transferee, one or more new Securities of the same series
having endorsed thereon a Guarantee executed by the Guarantor, of any authorized
denomination or denominations of a like aggregate principal amount.
At the option of the Holder, Securities of a series may be exchanged
for other Securities of the same series of any authorized denomination and of a
like aggregate principal amount, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
make available for delivery, the Securities having endorsed thereon a Guarantee
executed by the Guarantor which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
In connection with any request to remove the legends from any Security
on the basis that three years have elapsed from the later of the original
issuance of the Securities or from the date on which the Company or any
Affiliate of the Company was the owner of such Security, the Trustee and any
Security Registrar shall not be required to remove the legends from any
Securities until the Trustee or Security Registrar, as the case may be, receives
an Officers' Certificate from the Company stating that such removal is expressly
permitted by the terms of this Indenture and directing the Trustee or Security
Registrar, as the case may be, to remove such legend and stating the
circumstances which permit such removal. In the case of any transfer in
compliance with Rule 904 under the Securities Act, the Trustee shall not and any
Security Registrar shall not be required to remove the legends from any Security
until the Trustee or Security Registrar, as the case may be, receives the
Officers' "Certificate referred to above and an Opinion of Counsel stating that
in the opinion of such counsel the legends may be removed.
Upon any resale, pledge or other transfer of a Security to an
institutional accredited investor, such investor will deliver to the Trustee a
signed Transferee Letter of Representation in the form attached to this
Indenture as Annex B. Notwithstanding anything to the contrary set forth in this
Indenture and the Securities, the Trustee shall have no liability or
responsibility whatsoever to determine whether any transfer of Securities is
being made in compliance with federal and state securities laws or otherwise to
monitor compliance with such securities laws.
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In the case of any transfer of any security, the Trustee shall require
delivery of an executed Certificate of Transfer substantially in the form of
Annex C hereto, as a condition to such transfer and in the case of any transfer
of any Security to an institutional accredited investor or in an offshore
transaction in accordance with Regulation S under the Securities Act, the
Company may require delivery of such certifications, opinions and other
information as is contemplated in such Certificate of Transfer, as a condition
to such transfer and the Trustee shall effect such transfer only upon receipt of
an Officers' Certificate by the Company stating that the Company has received
such certifications, opinions and other information.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Security Registrar) be
duly endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to pay all documentary, stamp or similar issue or transfer taxes
or other governmental charges that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 3.4 or 9.6 not involving any transfer.
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If (i) any mutilated Security is surrendered to the Trustee, or (ii)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon Company order the Trustee shall authenticate and
make available for delivery, in exchange for any such mutilated Security or in
lieu of any such destroyed, lost or stolen Security, a new Security of the same
series and like aggregate principal amount, bearing a number not
contemporaneously outstanding and having a Guarantee endorsed thereon executed
by the Guarantor.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
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Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of a series issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company and the Guarantor with respect
to the Guarantee endorsed thereon, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be entitled to
all benefits of this Indenture equally and proportionately with any and all
other Securities of the same series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name such Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest. Payment
of interest will be made (i) in respect of Securities held by the Depository or
its nominee in the manner required by the Depository and (ii) in respect of
Securities held of record by Holders other than the Depository or its nominee at
the office or agency of the company maintained for such purpose pursuant to
Section 10.2; provided, however, that, in the case of a Security that is not a
Global Security, each installment of interest may at the Company's option be
paid by check mailed to addresses of the Persons entitled thereto as such
addresses shall appear on the Security Registrar.
Any interest on any Security of a series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the Holder on the Regular Record Date by virtue
of having been such Holder, and such defaulted interest and (to the extent
lawful) interest on such defaulted interest at the rate borne by the Securities
of such series (such defaulted interest and interest thereon herein collectively
called "Defaulted Interest") may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
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(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date, and in the name
and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be given in the manner provided for in Section 1.6, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
given, such Defaulted Interest shall be paid to the Persons in whose names
the Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such special Record Date and
shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
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SECTION 3.8. Persons Deemed Owners.
Prior to the due presentment of a Security for registration of
transfer, the Company, the Guarantor, the Trustee and any agent of the Company,
the Guarantor, or the Trustee may treat the Person in whose name such Security
is registered in the Security Register as the owner of such Security for the
purpose of receiving payment of principal of and (subject to Sections 3.5 and
3.7) interest on such Security and for all other purposes whatsoever, whether or
not such Security be overdue, and none of the Company, the Guarantor, the
Trustee or any agent of the Company, the Guarantor, or the Trustee shall be
affected by notice to the contrary.
SECTION 3.9. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
or the Guarantor may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company or
the Guarantor may have acquired in any manner whatsoever, and may deliver to the
Trustee (or to any other Person for delivery to the Trustee) for cancellation of
any Securities previously authenticated hereunder which the Company has not
issued and sold, and all Securities so delivered shall be promptly cancelled by
the Trustee. If the Company or the Guarantor shall so acquire any of the
Securities, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities unless and until
the same are surrendered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of by the Trustee in accordance
with its customary procedures and certification of their disposal delivered to
the Company.
SECTION 3.10. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect with respect to a series of Securities and the Guarantees (except as to
surviving rights of registration of transfer or exchange of Securities of such
series herein expressly provided for) and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture as to such series when
(1) either
(A) all Securities of such series theretofore authenticated and
delivered (other than (i) Securities of such series which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 3.6 and (ii) Securities of such series for whose
payment money has theretofore been deposited in trust with the Trustee
or any Paying Agent or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities of such series not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their Stated Maturity
within one year,
and the Company and/or the Guarantor, in the case of (i) or (ii)
above, has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount sufficient
to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal
and interest to the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be; provided, however, in the event a
petition for relief under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or other similar law, is filed with respect to
the Company within 91 days after the deposit and the
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Trustee is required to return the deposited money to the Company, the
obligations of the Company under this Indenture with respect to the
Securities of such series shall not be deemed terminated or
discharged;
(2) the Company and/or the Guarantor has paid or caused to be paid all
other sums payable hereunder by the Company in respect of such series of
Securities; and
(3) the Company and/or the Guarantor has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture in respect of such series of Securities have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.6 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in
trust and applied by it, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company, the Guarantor or any of their Affiliates acting as
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal and interest for whose payment such money has been deposited with
the Trustee; but such money need not be segregated from other funds except to
the extent required by law.
SECTION 4.3. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 4.2 with respect to Securities of any series by reason
of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's and
the Guarantor's obligations under this Indenture and the Securities and
Guarantees of such series shall be revived and reinstated as though no deposit
had occurred pursuant to Section 4.1, until such time as the Trustee or Paying
Agent is permitted to apply all such money with respect to Securities and
Guarantees of such series in accordance with Section 4.2; provide, however,
that if the Company or the Guarantor makes any payment of principal of or
interest on any Security of such series following the
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reinstatement of its obligations, the Company or the Guarantor shall be
subrogated to the rights of the Holders of the Securities of such series to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein with respect to Securities of
a series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of any interest on any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 30 days; or
(2) default in the payment of the principal of any Security of that
series at its Maturity; or
(3) default in the performance, or breach, of any covenant or warranty
of the Company or the Guarantor in this Indenture (other than a default in
the performance, or breach, of a covenant or warranty which is specifically
dealt with elsewhere in this Section), and continuance of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to the Company or the Guarantor, as the case may be, by the
Trustee or to the Company or the Guarantor, as the case may be, and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(4) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or a Subsidiary (including a
default with respect to Securities of the series other than-that series) or
under any mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any indebtedness for money
borrowed by the Company or a Subsidiary (including this Indenture), whether
such indebtedness now exists or shall hereafter be created, which default
(i) shall have resulted from failure by the Company or any Subsidiary to
pay when due the principal amount of
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such indebtedness at maturity, upon redemption or otherwise in an amount in
excess of $20 million after the expiration of any applicable grace period
or (ii) shall have resulted in such indebtedness in an amount in excess of
$20 million becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, in either case
without such indebtedness having been discharged, or such acceleration
having been rescinded or annulled, within a period of 10 days after there
shall have been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of that series a
written notice specifying such default and requiring the Company to cause
such indebtedness to be discharged or cause such acceleration to be
rescinded or annulled and stating that such notice is a "Notice of Default"
hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company, the Guarantor or any
Significant Subsidiary of the Company or the Guarantor in an involuntary
case or proceeding under the bankruptcy laws or any other similar federal
or state law of either the United States or Liechtenstein or (B) a decree
or order adjudging the Company, the Guarantor or any Significant Subsidiary
of the Company or the Guarantor a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment
or composition of or in respect of the Company, the Guarantor or any
Significant Subsidiary of the Company or the Guarantor under any applicable
federal or state law of either the United States or Liechtenstein, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company, the Guarantor or any
Significant Subsidiary of the Company or the Guarantor or of any
substantial part of the property of any of them, or ordering the winding up
or liquidation of the affairs of any of them, and the continuance of any
such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 90 consecutive days; or
(6) the commencement by the Company, the Guarantor or any Significant
Subsidiary of the Company or the Guarantor of a voluntary case or
proceeding under the bankruptcy laws or any other similar federal or state
law of either the United States or Liechtenstein, or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it
to the entry of a decree or order for relief in respect of the Company, the
Guarantor or any Significant Subsidiary of the Company or the Guarantor in
an involuntary case or proceeding under the bankruptcy laws or any other
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similar federal or state law of either the United States or Liechtenstein
or to the commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law of
either the United States or Liechtenstein, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company, the Guarantor or any Significant Subsidiary of the
Company or the Guarantor or of any substantial part of its property, or the
making by it of a general assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company, the
Guarantor or any Significant Subsidiary of the Company or the Guarantor in
furtherance of any such actions; or
(7) the Guarantee ceases to be in full force and effect (other than in
accordance with the terms of the Guarantee and this Indenture) or is
declared null and void and unenforceable or found to be invalid or the
Guarantor denies its liability under its Guarantee (other than by reason of
release of the Guarantor from the Guarantee in accordance with the terms of
the Guarantee and this Indenture).
SECTION 5.2. Acceleration of Maturity; Recission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(5) or Section 5.1(6), with respect to the Company or the Guarantor)
with respect to Securities of any series at the time outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in principal amount of the Outstanding Securities of that series may
declare the principal amount of all the Securities of that series to be due and
payable immediately, by a notice in writing to the Company or the Guarantor
(and to the Trustee if given by Holders), and upon any such declaration such
principal amount shall become immediately due and payable. If an Event of
Default specified in Section 5.1(5) or Section 5.1(6) (with respect to the
Company or the Guarantor) occurs, the principal amount of all the Securities
shall automatically, and without any declaration or other action on the part of
the Trustee or any Holder, become immediately due and payable.
At any time after a declaration of acceleration with respect to
Securities of a series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Outstanding
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Securities of that series, by written notice to the Company and the Trustee,
may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay,
(A) all overdue interest on all outstanding Securities of that
series,
(B) all unpaid principal of any outstanding Securities of that
series which has become due otherwise than by such declaration of
acceleration, and interest on such unpaid principal at the rate borne
by such Securities,
(C) to the extent that payment of such interest is lawful,
interest on overdue interest at the rate borne by such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of amounts of principal of or interest on
Securities of that series which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(a) default is made in the payment of any installment of interest on
any Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of any Security at
the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal and interest, and interest on any
overdue principal and, to the extent that payment of such interest shall be
legally
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enforceable, upon any overdue installment of interest, at the rate borne by
such Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
by such appropriate, judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, the Guarantor or any other obligor
upon the Securities or the property of the Company, the Guarantor or of such
other obligor or their creditors, the Trustee (irrespective of whether the
principal of the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Company or the Guarantor for the payment of overdue
principal, or interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to have
the claims of the Trusted (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding,
and
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(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents,
and counsel, and any other amounts due the Trustee under Section 6.6.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 5.5. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name and as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 5.6. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account or principal or interest,
upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
6.6;
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without preference
or priority of
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any kind, according to the amounts due and payable on such Securities for
principal and interest, respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 5.7. Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority or
more in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment, as provided herein and in such Security, of the Principal of
and (subject to
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Section 3.7) interest on, such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Guarantor the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
SECTION 5.10. Rights And Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 3.6, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
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 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 5.12. Control by Holders.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series, provided that
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(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders not consenting.
SECTION 5.13. Waiver of Past Defaults.
Subject to the provisions of Section 5.8, the Holders of not less than
a majority in principal amount of the Outstanding Securities of any series may
on behalf of the Holders of all the Securities of such series waive any past
default hereunder with respect to such series and its consequences, except a
default
(1) in respect of the payment of the principal of or interest on any
Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
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; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 5.14. Waiver of Stay or Extension Laws.
Each of the Company and the Guarantor covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now, or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and each of the
Company and the Guarantor (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
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SECTION 5.15. Undertaking for Costs.
All parties to this Indenture agree and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, 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,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities of any series, or to any suit
instituted by any Holder of any Security for the enforcement of the payment of
the principal of or interest on or any Additional Amounts in respect of any
Security or after the Stated Maturity or Maturities expressed in such Security
(or, in the case of redemption, on or after the Redemption Date).
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Notice of Defaults.
Within 60 days after the occurrence of any Default hereunder with
respect to the Securities of any series, the Trustee shall transmit in the
manner and to the extent provided in TIA Section 313(c), notice of such Default
hereunder known to the Trustee, unless such Default shall have been cured or
waived.
SECTION 6.2. Certain Rights of Trustee.
The provisions of TIA Sections 315(a) and 315(c) shall apply to the
Trustee and the term "default" as used in such Section shall mean "Event of
Default" as defined in Section 5.1. Subject to the provisions of TIA Sections
315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document reasonably believed by it to be genuine and to have
been signed or presented by the proper party or parties;
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(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may 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;
(4) the Trustee may consult with counsel of its selection and the
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;
(5) 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 to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(6) 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, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, or the Guarantor personally or by agent or attorney;
(7) 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; and
(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture;
provided the
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Trustee's action does not constitute negligence or bad faith.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 6.3. Trustee Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company or the Guarantor, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities (including the Guarantees
endorsed thereon), except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder. The Trustee shall not be accountable for
the use or application by the Company of Securities or the proceeds thereof.
SECTION 6.4. May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, the Guarantor or of the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
TIA Sections 310(b) and 311, may otherwise deal with the Company or the
Guarantor with the same rights it would have if it were not Trustee, Paying
Agent, Security Registrar or such other agent.
SECTION 6.5. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 6.6. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited
by any
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provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The Trustee shall notify the Company promptly of any action, suit or
proceeding for which it may seek indemnity. The Company shall defend such
action, suit or proceeding and the Trustee may have separate counsel, and, if
the Company has failed to assume the defense and employ counsel, or if the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both the Trustee and the Company and the Trustee shall have
been advised by its counsel that representation of the Trustee and the Company
by the same counsel would be inappropriate under applicable standards of
professional conduct due to actual or potential differing interests between
them, the Company shall pay the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its consent, which
shall not be unreasonably withheld.
The indemnity provided for in this Section 6.6 shall survive the
resignation or removal of any Trustee under this Indenture.
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such
obligations of the Company, the Trustee shall have a claim prior to the
Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the payment of principal of or interest on
particular Securities.
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When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.1(5) or Section 5.1(6), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable United States, Liechtenstein or federal or
state bankruptcy, insolvency or other similar law.
SECTION 6.7. Corporate Trustee Required; Eligibility; Conflicting
Interests.
(a) There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall have a
combined capital and surplus of at least US$50,000,000. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of federal, state, territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
(b) The Trustee shall comply with the provisions of TIA Section 310(b)
and any reference in said Section to the "indenture to be qualified" shall be
deemed to refer to this Indenture.
SECTION 6.8. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.9.
(b) The Trustee may resign at any time with respect to the Securities
of one or both series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 6.9 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of not less than a majority in
principal amount of the Outstanding
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Securities of such series, delivered to the Trustee and to the Company.
(d) If at any time;
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(2) the Trustee shall cease to be eligible under Section 6.7(a) and
shall fail to resign after written request therefor by the Company or by
any Holder who has been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee with respect to all Securities, or (ii) subject to Section 5.15, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or both series the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or all series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or
both series and that at any time there shall be only one Trustee with respect
to the Securities of any particular series). If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee with respect to
the Securities of such series and supersede the successor Trustee appointed by
the Company. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by
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the Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
to the Holders of Securities of such series in the manner provided for in
Section 1.6. Each notice shall include the name of such successor Trustee and
the address of its Corporate Trust Office.
SECTION 6.9. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company 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,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, 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.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of only one series, the Company, the Guarantor, the
retiring Trustee and each successor Trustee with respect to the Securities of
that series shall execute and deliver an indenture supplemental hereto wherein
each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that Series to which the appointment of such successor Trustee relates, (2) if
the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee,
and (3) shall add to or change any of the provisions of this Indenture as shall
be necessary to provide for
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or facilitate the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same trust and that
each such Trustee shall be trustee of a trust or trusts hereunder separate and
apart from any trust or trusts hereunder administered by any other such
Trustee; and upon the execution and delivery of such supplemental indenture to
resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates; but, on request of the Company or any successor Trustee, such retiring
Trustee shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates.
(c) Upon request of any such successor Trustee, the Company and the
Guarantor shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all rights, powers and
trusts referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) 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.
SECTION 6.10. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities;
and in case at that time any of the Securities shall not have been
authenticated, any successor Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of the successor Trustee;
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and in all such cases such certificates shall have the full force which it is
anywhere in the Securities or in this Indenture provided that the certificate
of the Trustee shall have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 6.11. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
or the Guarantor (or any other obligor under the Securities), the Trustee shall
be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company or the Guarantor (or any such other
obligor).
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. Disclosure of Names and Addresses of Holders.
Every Holder of Securities, by receiving and holding the same agrees
with the Company and the Trustee that none of the Company or the Trustee or any
agent of either of them shall be held accountable by reason of the disclosure
of any such information as to the names and addresses of the Holders in
accordance with TIA Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made in the manner
provided in TIA Section 312(b).
SECTION 7.2. Reports by Trustee.
Within 60 days after November 15 of each year commencing with the
first November 15 after the first issuance of Securities, the Trustee shall
transmit to the Holders, in accordance with, and to the extent required by,
TIA Sections 313(a) and 313(c), a brief report dated as of such November 15.
SECTION 7.3. Reports by Company and Guarantor.
(a) The Company shall furnish to the Trustee (i) within 120 days after
the end of each fiscal year of the Company, copies of the Company's annual
audited reports containing a description of its operations and annual financial
statements prepared in accordance with GAAP,
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together with a report thereon by an independent accountant of established
national reputation (ii) within 90 days after the end of the first half of each
fiscal year of the Company, unaudited financial statements for the period
commencing at the end of the previous fiscal year and ending with the end of
such half, certified by a principal financial officer of the Company, prepared
in accordance with GAAP and (iii) upon listing of any of the Company's Debt or
Capital Stock on the any exchange, all other reports and communications that
are generally made available to holders of such securities. The Guarantor shall
furnish to the Trustee within 120 days after the end of each fiscal year of the
Guarantor, copies of the Guarantor's annual audited reports as required to be
prepared pursuant to the laws of Liechtenstein.
(b) Unless the Company and the Guarantor furnishes information to the
Commission or pursuant to Section 13 or 15(d) of the Exchange Act or is exempt
from the reporting requirements thereof pursuant to Section 12g3-2(b)
thereunder, upon the request of a Holder or a beneficial owner of a Global
Security, the Company and the Guarantor shall promptly furnish or cause to be
furnished such information as is required pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto) to such Holder or
beneficial owner or to a prospective purchaser of such Security designated by
such Holder or beneficial owner, as the case may be, in order to permit
compliance by such Holder with Rule 144A under the Securities Act in connection
with the resale of such Security by such Holder or beneficial owner.
(c) If the Company shall become subject to Section 13 or 15(d) of the
Exchange Act, the Company shall (i) file with the Trustee, within 15 days after
the Company is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act and (ii) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations.
(d) The Company shall transmit by mail to all Holders, in the manner
and to the extent provided in TIA Section 313(c), within 30 days after the
filing, thereof with the
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Trustee, such information, documents and reports required to be filed by the
Company pursuant to paragraphs (a) and (c) of this Section.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company and Guarantor May Consolidate, etc., Only on
Certain Terms.
The Company and the Guarantor shall not consolidate with or merge into
any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and the Company and the Guarantor
shall not permit any Person to consolidate with or merge into the Company or
the Guarantor, as the case may be, (any such consolidation, merger, conveyance,
transfer or lease being referred to herein as a "Transaction") unless:
(1) (a) the company or the Guarantor, as the case may be, is the
surviving entity in any such consolidation or merger or (b) in case the
Company or the Guarantor shall consolidate or merge into another Person or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the Person formed by such consolidation or into
which the Company or the Guarantor is merged or the Person which acquires
by conveyance or transfer, or which leases, the properties and assets of
the Company or the Guarantor substantially as an entirety, shall be a
Person organized and existing under the laws of the United States, in the
case of the Company, and a Person organized and existing under the laws of
Liechtenstein, Switzerland or any member of the European Union or European
Economic Area, in the case of the Guarantor, and shall expressly assume, by
an indenture supplemental hereto, executed and delivered to the Trustee,
the due and punctual payment of the principal of and interest on, and any
Additional Amounts with respect to all the Securities and the performance
of every covenant of this Indenture on the part of the Company and the
Guarantor, as the case may be, to be performed or observed;
(2) immediately after giving affect to such transaction, no Event of
Default, and no Default, shall have happened and be continuing; and
(3) the Company and the Guarantor, as the case may be, has delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such Transaction, and if a supplemental indenture is required
in connection with
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such Transaction, such supplemental indenture, comply with this Article and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
SECTION 8.2. Successor Person Substituted.
Upon any Transaction, the successor Person formed by such
consolidation or into which the Company or the Guarantor is merged or to which
such conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company or the Guarantor,
as the case may be, under this Indenture with the same effect as if such
Successor Person had been named as the Company or the Guarantor herein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Holder.
Without the consent of any Holders, the Company, the Guarantor 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, for any of
the following purposes:
(1) to evidence the succession of another Person to the Company or the
Guarantor, as the case may be, and the assumption by any such successor of
the covenants of the Company or the Guarantor, as the case may be,
contained herein and in the Securities in accordance with Section 8.1; or
(2) to add to the covenants of the Company and the Guarantor for the
benefit of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein conferred
upon the Company; or
(3) to add any additional Events of Default (and if such Events of
Default are to be applicable to less than all series of Securities, stating
that such Events of Default are expressly being included solely to be
applicable to such series); or
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(4) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities of one or both series
and to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
6.9; or
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture; provided that such action shall not
adversely affect the interests of the Holders of Securities of any series;
or
(6) to secure the Securities pursuant to the requirements of Section
10.6 or otherwise.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the written consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company, the
Guarantor and the Trustee, the Company, the Guarantor 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 of
Securities of such series under this indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest hereon or change any Place of
Payment where, or the coin or currency in which, any Security or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the outstanding
Securities of any series, 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
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(3) change any obligation of the Company to maintain an office or
agency in the places and for the purposes specified in Section 10.2, or
(4) modify any of the provisions of this Section or Sections 5.13,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby,
(5) adversely modify the terms and conditions of the obligation of the
Guarantor or ranking or priority of the Securities or the Guarantees; or
(6) release the Guarantor from any of its obligations under the
Guarantees or this Indenture otherwise than in accordance with the terms
hereof.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one particular series of Securities, or which modifies the rights
of the Holders of Securities of such series with respect to such covenant or
other provision, shall be deemed not to affect the rights under this Indenture
of the Holders of Securities of the other series.
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 9.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and 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. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
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 Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
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SECTION 9.5. Conformity with Trust Indenture.
Every supplemental indenture executed pursuant to the Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities (having a Guarantee endorsed thereon executed by the Guarantor)
of any series so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
SECTION 9.7. Notice of Supplemental Indentures.
Promptly after the execution by the Company, the Guarantor and the
Trustee of any supplemental indenture pursuant to the provisions of Section 9.2,
the Company shall give notice thereof to the Holders of each Outstanding
security affected, in the manner provided for in Section 1.6, setting forth in
general terms the substance of such supplemental indenture.
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal and Interest.
The Company covenants and agrees for the benefit of the Holders of such
series of Securities that it will duly and punctually pay the principal of and
interest on the Securities of that series in accordance with the terms of the
Securities and this Indenture.
SECTION 10.2. Maintenance of Office or Agency.
The Company and the Guarantor will maintain in The City of New York and
each other Place of Payment, if any, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company and the Guarantor in respect of the Securities, the Guarantees and
this Indenture may be served. The Corporate Trust
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Office of the Trustee shall be such office or agency of the Company and the
Guarantor, unless the Company and the Guarantor shall designate and maintain
some other office or agency for one or more of such purposes. The Company and
the Guarantor will give prompt written notice to the Trustee of any change in
the location of any such office or agency. If at any time the Company or the
Guarantor shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company and the Guarantor hereby appoint the
Trustee as their agent to receive all such presentations, surrenders, notices
and demands.
The Company and the Guarantor may also from time to time designate one
or more other offices or agencies (in or outside of The City of New York) where
the Securities may be presented or surrendered for any or all such purposes and
may from time to time rescind any such designation; provided, however, that no
such designation or rescission shall in any manner relieve the Company or the
Guarantor of its obligation to maintain an office or agency in The City of New
York for such purposes. The Company and the Guarantor will give prompt written
notice to the Trustee of any such designation or rescission and any change in
the location of any such other office or agency.
SECTION 10.3. Money for Security Payments to Be Held in Trust.
If the Company or the Guarantor or any of its respective Affiliates
shall at any time act as Paying Agent with respect to any series of Securities,
the Company, the Guarantor or such Affiliate will, on or before each due date of
the principal of or interest an any of the Securities of that series, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of the Securities, it will, on or before each due date of the principal
of or interest on, any Securities of that series, deposit with a Paying Agent a
sum sufficient to pay the principal or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent for any series of the
Securities (other than the Trustee) to execute and deliver
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to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of or
interest on Securities of that series in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal of
or interest on the Securities of that series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same terms as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or interest an any
Security and remaining unclaimed for two years after such principal or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company or the Guarantor) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City of
New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
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SECTION 10.4. Statement As to Compliance.
Each of the Company and the Guarantor will deliver to the Trustee,
within 120 days after the end of each fiscal year, an Officers' Certificate as
to his or her knowledge of the company's and the Guarantor's respective
compliance with all conditions and covenants under this Indenture, and, if the
Company or the Guarantor shall be in default, specifying all such defaults and
the nature thereof, including what actions are being taken or proposed to be
taken with respect thereto, of which each of such signers may have knowledge.
For purposes of this Section 10.4, such compliance shall be determined without
regard to any period of grace or requirement of notice under this Indenture.
SECTION 10.5. Existence.
Subject to Article VIII, the company will do or cause to be done all
things necessary to preserve and keep in full force and effect its rights and
franchises; provided, however, that the Company shall not be required to
preserve any such right or franchise if the Board of Directors shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and that the loss thereof is not and is not reasonably
likely to be disadvantageous in any material respect to the Holders.
SECTION 10.6. Limitation on Liens.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, issue, assume or guarantee any Indebtedness for borrowed
money if such Indebtedness is secured by a Lien upon or with respect to any of
the assets of the Company or any such Subsidiary, whether now owned or hereafter
acquired, unless contemporaneously therewith or prior thereto all payments due
under this Indenture and the Securities are secured on an equal and ratable
basis with the obligation or liability so secured until such time as such
obligation or liability is no longer secured by a Lien, provided that if the
obligation or liability so secured in junior in right of payment to the
Securities, then the Lien created hereunder in favor of the holders of the
Securities shall be made senior to the Liens securing such obligation or
liability. The foregoing restrictions shall not apply to any Permitted Liens.
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ARTICLE XI
REDEMPTION
SECTION 11.1. Redemption.
The Securities shall not be redeemable prior to maturity, except
pursuant to Section 11.2.
SECTION 11.2. Tax Redemption.
(a) If it is determined by the Guarantor that (i) the Guarantor would
be required, pursuant to section 13.1, to pay Additional Amounts in respect of
principal, or interest, if any, on the next succeeding date for the payment
thereof or (ii) any tax would be imposed (whether by way of deduction,
withholding or otherwise) by Liechtenstein (or the jurisdiction of incorporation
of a successor corporation to the Guarantor pursuant to Section 8.2) or by any
political subdivision or taxing authority thereof or therein, upon or with
respect to any principal or interest, if any, received or receivable by the
Company from the Guarantor or any of its subsidiaries, incorporated in, or
resident for tax purposes under the laws of, Liechtenstein (or the jurisdiction
of incorporation of a successor corporation to the Guarantor), the Guarantor or
the Company may, at their option, redeem such Securities in whole at any time
upon not more than 60 days' nor less than 30 days' prior notice to the Trustee
and the Holders of such Securities at a redemption price equal to 100 percent of
the principal amount thereof plus accrued interest to the date fixed for
redemption; provided, however, that no such redemption shall occur when, in the
Guarantor's reasonable determination, it is not unduly burdensome for the
Company or the Guarantor to avoid the obligation to pay Additional Amounts.
(b) Prior to any redemption of Securities pursuant to paragraph (a)
above, the Guarantor shall provide the Trustee with an Opinion of Counsel that
the conditions precedent to the right of Guarantor or the Company to redeem such
securities pursuant to this Section have occurred. Such Opinion of Counsel shall
be based on the laws in effect on the date of such opinion or to become
effective on or before the next succeeding date of payment of principal or
interest.
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ARTICLE XII
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 12.1. Company's Option to Effect Defeasance or Covenant
Defeasance.
Each of the Company or the Guarantor may, at their option by Board
Resolution, at any time, elect to have either section 12.2 or Section 12.3 be
applied to all Outstanding Securities of any series upon compliance with the
conditions set forth below in this Article XII.
SECTION 12.2. Defeasance and Discharge.
Upon the Company's or the Guarantor's exercise of the option provided
in Section 12.1 to have this Section 12.2 applied to the Outstanding Securities
of any series, the Company shall be deemed to have been discharged from its
obligations with respect to all Outstanding Securities of such series on the
date the conditions set forth in Section 12.4 are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
Outstanding Securities, which shall thereafter be deemed to be Outstanding"
only for the purposes of Section 12.5 and the other Sections of this Indenture
referred to in (A) and (B) below, and to have satisfied all its other
obligations under such Securities of such series and this Indenture insofar as
the Securities of such series are concerned (and the Trustee at the expense of
the Company, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of Outstanding Securities of such series to
receive, solely from the trust fund described in Section 12.4 and as more fully
set forth in such Section, payments in respect of the principal of and interest
on such Securities when such payments are due, (B) the Company's obligations
with respect to such Securities under Sections 3.4, 3.5, 3.6, 10.2, 10.3 and
10.5 and with respect to the Trustee under Section 6.6, (C) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (D) this Article XII.
Subject to compliance with this Article XII, the Company or the Guarantor may
exercise its option under this Section 12.2 notwithstanding the prior exercise
of its option under Section 12.3 with respect to the Securities of such series.
SECTION 12.3. Covenant Defeasance.
Upon the Company's or the Guarantor's exercise of the option provided
in Section 12.1 to have this Section 12.3 applied to the Outstanding Securities
of any series, the Company shall be released from its obligations under Section
10.6 with respect to
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the Outstanding Securities of such series on and after the date the conditions
set forth below are satisfied and the Company and the Guarantor shall be
released from their obligations under Article VIII (hereinafter, "covenant
defeasance"), and the Securities of such series shall thereafter be deemed to be
not "Outstanding" for the purposes of any direction, waiver, consent or
declaration or Act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the Outstanding Securities of such series, the
Company and the Guarantor may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 5.13), but,
except as specified above, the remainder of this Indenture and the Securities of
such series shall be unaffected thereby.
SECTION 12.4. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section
12,2 or Section 12.3 to the outstanding Securities of any series:
(1) The Company or the Guarantor shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.7 who shall agree to comply with the provisions
of this Article XII applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of the Securities
of such series, (A) money in United States dollars in an amount, or (B)
U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment,
money in an amount, or (C) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, (i) the principal of and interest
on the Outstanding Securities of such series on the Stated Maturity of such
principal or installment of interest in accordance with the terms of this
Indenture and of the Securities of such series; provided that the Trustee
shall have been irrevocably instructed to apply such money or the proceeds
of such
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U.S. Government Obligations to said payments with respect to the
Securities of such series. As used herein, "U.S. Government Obligations"
means securities that are (x) direct obligations of the United States of
America for the timely payment of which its full faith and credit is
pledged or (y) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act) as custodian with respect to any
such U.S. Government Obligation and held by such custodian for the account
of the holder of such depositary receipt or a specific payment of
principal of or interest on any such U.S. Government Obligation held by
such custodian for the account of the holder of such depository receipt,
that (except as required by law) such custodian is not authorized to make
any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or interest
on the U.S. Government Obligation evidenced by such depository receipt.
(2) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as paragraphs (5) and
(6) of Section 5.1 hereof are concerned, at any time on or prior to six
months after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such six
month period).
(3) Such defeasance or covenant defeasance shall not result in a breach
or violation of, or constitute a default under, this Indenture or any other
material agreement or instrument to which the Company is a party or by
which it is bound.
(4) In the case of an election under Section 12.2, the Company or the
Guarantor shall have delivered to the Trustee an Opinion of Counsel stating
that (x) the Company has received from, or there has been published by, the
United States Internal Revenue Service a ruling or (y) since the date first
set forth hereinabove, there has been a change in the applicable United
States federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the Outstanding
Securities of such series will not recognize income, gain or loss for
United States federal income tax purposes as a result of such defeasance
and will be subject to United
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States federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance had not
occurred.
(5) in the case of an election under Section 12.3, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Securities of such series will not recognize
income, gain or loss for United States federal income tax purposes as a
result of such covenant defeasance and will be subject to United States
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred.
(6) The Company or the Guarantor shall have delivered to the Trustee an
Officers' Certificate to the effect that the Securities of such series, if
then listed on any Securities exchange, will not be delisted as a result of
such deposit.
(7) Such defeasance or covenant defeasance shall not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture
Act (assuming all Securities are in default within the meaning of such
Act).
(8) The Company or the Guarantor shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance under
Section 12.2 or the covenant defeasance under Section 12.3 (as the case may
be) have been complied with.
(9) Such defeasance or covenant defeasance shall not result in the
trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940, as amended, unless such
trust shall be qualified under such Act or exempt from regulation
thereunder.
SECTION 12.5. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 10.3, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee -- collectively for purposes of
this Section 12.5, the "Trustee") pursuant to Section 12.4 in respect of the
Outstanding Securities of any series shall be held in trust and applied by the
Trustee, in accordance with the provisions of the Securities of such series and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company or the Guarantor or any Affiliate thereof
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acting as Paying Agent) as the Trustee may determine, to the Holders of the
Securities of such series of all sums due and to become due thereon in respect
of principal and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company or the Guarantor, as the case may be, shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
12.4 or the principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of the Holders of
the Outstanding Securities.
Anything in this Article XII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company or the Guarantor, as the case may
be, from time to time upon Company Request any money or U.S. Government
Obligations held by it as provided in Section 12.4 with respect to Securities of
any series which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect a defeasance or covenant defeasance, as applicable, with
respect to the Securities of such series in accordance with this Article.
SECTION 12.6. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 12.5 with respect to Securities of any series by reason
of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's and
the Guarantor's obligations under this Indenture and the Securities of such
series shall be revived and reinstated as though no deposit had occurred
pursuant to Section 12.2 or 12.3, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such money with respect to
Securities of such series in accordance with Section 12.5; provided, however,
that if the Company or the Guarantor makes any payment of principal of or
interest on any Security of such series following the reinstatement of its
obligations, the Company or the Guarantor shall be subrogated to the rights of
the Holders of the Securities of such series to receive such payment from the
money held by the Trustee or Paying Agent.
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ARTICLE XIII
GUARANTEE
SECTION 13.1. Guarantee. The Guarantor hereby fully, unconditionally
and irrevocably guarantees to each Holder of a Security, and to the Trustee for
itself and on behalf of each such Holder, the payment and performance of all
obligations of the Company under this Indenture and the Securities. In
furtherance of the foregoing and not in limitation of any other right which any
Holder or the Trustee has at law or in equity against the Guarantor by virtue
hereof, upon the failure of the Company to pay any obligation when and as the
same shall become due, whether at maturity, by acceleration, by redemption or
otherwise, or to perform or comply with any other obligation, the Guarantor
hereby promises to and will, as set forth herein, forthwith pay or cause to be
paid, in cash, to the Holders or the Trustee on behalf of the Holders (i) the
unpaid principal amount of such obligations, (ii) accrued and unpaid interest on
such obligations (to the extent not prohibited by law) and (iii) all other
monetary obligations, if any, of the Company to the Holders or the Trustee under
this Indenture and on the Securities. In the event that any payment is sought
from the Guarantor in respect of its obligations hereunder, written notice
stating that amounts due hereunder will become due and remain unpaid shall be
given to the Guarantor at the address set forth in Section 1.5 hereof by the
Company no later than five Business Days prior to the respective due dates for
such payment set forth herein or in the Securities and the Guarantor agrees that
it will make any payment required on such due date or dates.
The Guarantor hereby agrees that in all respects its obligations
hereunder shall be unconditional and absolute, irrespective of the validity,
regularity or enforceability of any Security or this Indenture, the absence of
any action to enforce the same, the granting of any waiver or consent by the
Holder of any such Security with respect to any provisions thereof, the
extension or renewal, in whole or in part, of any obligation of the Company on
this Indenture or the Securities, the recovery of any judgment against the
Company or any action to enforce the same, or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Except as set forth in the first paragraph hereof, the Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that the Guarantees will not be discharged except by complete
payment and performance of the obligations contained in any Security and in the
Guarantees. The Guarantor further agrees that its guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any
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part thereof, of any obligation by the Company is rescinded or must otherwise be
restored by any Holder or the Trustee upon the bankruptcy or reorganization of
the Company or otherwise or if any such payment, or any part thereof, by the
Guarantor is rescinded or must otherwise be restored by any Holder or the
Trustee and such payment or such part is repaid to the Guarantor.
The Guarantor further agrees, to the fullest extent that it may
lawfully do so, that, as between the Guarantor, on the one hand, and the Holders
and the Trustee, on the other hand, the maturity of obligations guaranteed
hereby may be accelerated as provided in Section 5.2 hereof for the purposes of
the Guarantees, notwithstanding any stay, injunction or other prohibition extant
under any applicable bankruptcy law preventing such acceleration in respect of
the obligations guaranteed hereby.
The Guarantor hereby further agrees that any amounts to be paid by the
Guarantor under the Guarantees shall be paid without deduction or withholding
for any and all present and future taxes, levies, imposts or other governmental
charges whatsoever imposed, assessed, levied or collected by or for the account
of Liechtenstein (or any jurisdiction of a successor entity of the Guarantor) or
any political subdivision or taxing authority thereof or therein or, if
deduction or withholding of any such taxes, levies, imposts or other
governmental charges shall at any time be required by Liechtenstein (or any
jurisdiction of a successor entity of the Guarantor) or any such subdivision or
authority, the Guarantor will pay such additional amount ("Additional Amounts")
in respect of principal and interest, if any, as may be necessary in order that
the net amounts paid to the Holder of such Security or the Trustee under this
Indenture, as the case may be, pursuant to the Guarantees, after such deduction
or withholding, shall equal the respective amounts of principal and interest, if
any, as specified in the Security to which such Holder or the Trustee is
entitled; provided, however, that the foregoing shall not apply to (i) any
present or future taxes, levies, imposts or other governmental charges which
would not have been so imposed, assessed, levied or collected but for the fact
that the Holder or beneficial owner of such Security is or has been a
domiciliary, national or resident of, or engaging or having been engaged in
business or maintaining or having maintained a permanent establishment or being
or having been physically present in, Liechtenstein (or any jurisdiction of a
successor entity of the Guarantor) or such political subdivision or otherwise
having or having had some connection with Liechtenstein (or any jurisdiction of
a successor entity of the Guarantor) or such political subdivision other than
the holding or ownership of a Security, or the collection of, principal of, and
interest, if any, on, or the enforcement of, a Security or Guarantee, (ii) any
present or future taxes, levies, imposts or other governmental charges which
would not have been
66
<PAGE> 72
so imposed, assessed, levied or collected but for the fact that, where
presentation is required, such Security was presented more than thirty days
after the date such payment became due or was provided for, whichever is later,
(iii) any present or future taxes, levies, imposts or other governmental charges
which are payable otherwise than by deduction or withholding from payments on or
in respect of such Security or the Guarantees, (iv) any present or future taxes,
levies, imposts or other governmental charges which would not have been so
imposed, assessed, levied or collected but for the failure to comply with any
certification, identification or other reporting requirements concerning the
nationality, residence, identity or connection with Liechtenstein (or any
jurisdiction of a successor entity of the Guarantor) or any political
subdivision thereof of the Holder or beneficial owner of such Security, if
compliance is required by statute or by regulation of Liechtenstein (or any
jurisdiction of a successor entity of the Guarantor) or such political
subdivision as a condition to relief or exemption from such taxes, levies,
imposts or other governmental charges, provided that any such reporting
requirement, in the Guarantor's reasonable determination, is not materially more
burdensome than would be required under U.S. Federal income tax withholding
rules in a comparable situation, (v) any present or future taxes, levies,
imposts or other governmental charges (A) which would not have been so imposed,
assessed, levied or collected if the beneficial owner of such Security had been
the Holder of such Security or (B) which, if the beneficial owner of such
Security held the Security as the Holder of such Security, would have been
excluded pursuant to clauses (i) through ((iv)) inclusive above, provided that
this exception shall not apply as a result of the Depository being the Holder or
(vi) any estate, inheritance, gift, sale, transfer, personal property or similar
tax, assessment or other governmental charge.
The Guarantor shall be subrogated to all rights of the Holder of any
Securities and the Trustee against the Company in respect of any amounts paid to
the Holder and the Trustee by the Guarantor pursuant to the provisions of this
Guarantee; provided, however, that the Guarantor shall not be entitled to
enforce, or to receive any payments arising out of or based upon, such right of
subrogation until the principal and interest on all of the Securities, and the
obligations set forth in Section 6.6, shall have been paid in full.
SECTION 13.2. Execution and Delivery of Guarantees.
To evidence its guarantee provided in this Article, the Guarantor
hereby agrees to execute the Guarantees substantially in the form of Annex A,
which is a part of this Indenture. Each such Guarantee shall be executed on
behalf of the Guarantor by duly authorized officers. The signature of any of
these officers on the Guarantees may be manual or facsimile.
67
<PAGE> 73
The delivery of any Securities by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantees endorsed
thereon on behalf of the Guarantor.
The Guarantees shall be governed by and construed in accordance with
the law of the State of New York without regard to principles of conflicts of
law.
-----------------------------------
This Indenture may be signed in any number of counterparts each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same indenture.
68
<PAGE> 74
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
LGT ASSET MANAGEMENT, INC.
By: [ILLEGIBLE]
-------------------------------------------
Title: Chief Financial Officer
By: [ILLEGIBLE]
-------------------------------------------
Title: Chief Information Officer
LGT BANK IN LIECHTENSTEIN AKTIENGESELLSCHAFT
By: [ILLEGIBLE]
-------------------------------------------
Title:
By: [ILLEGIBLE]
-------------------------------------------
Title:
CITIBANK, N.A.,
Trustee
By: /s/ JOHN J. BYRNES
-------------------------------------------
Title: Vice President
69
<PAGE> 75
ANNEX A
Form of Security
(Form of Face of Security.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") THAT IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY, OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY)
ONLY (A) TO THE COMPANY OR THE GUARANTOR, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED
INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), ~2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE
(D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO IT, AND DELIVERY BY THE TRANSFEROR TO
THE COMPANY AND THE TRUSTEE OF A TRANSFER NOTICE, THE FORM OF WHICH MAY BE
OBTAINED FROM THE TRUSTEE AND, IN THE CASE OF THE FOREGOING CLAUSE (E), DELIVERY
BY THE TRANSFEROR OF A LETTER OF REPRESENTATION SIGNED BY SUCH TRANSFEREE, THE
FORM OF WHICH MAY BE OBTAINED FROM THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON
A-1
<PAGE> 76
THE REQUEST OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION
TERMINATION DATE.](1)
[THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF AMY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.](2)
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY ("DTC") A NEW YORK CORPORATION TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT 15 MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](3)
- --------------------
(1) Until the expiration of three years from the original issuance of
the Securities, all Securities, other than Securities sold in
reliance on Regulation S under the Securities Act, will bear this
legend.
(2) Every Global Security authenticated and delivered hereunder shall
bear a legend in substantially this form, in capital letters and
bold-face type.
(3) If the Depository is the Depository Trust Company, the Global
Security authenticated and delivered hereunder shall also bear a
legend in substantially this form, in capital letters and bold-face
type.
A-2
<PAGE> 77
LGT ASSET MANAGEMENT, INC.
[ ] [ ] % SENIOR NOTES DUE [2001][2006]
No._________ $_______
LGT ASSET MANAGEMENT, INC., a California corporation (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________ or registered assigns, the principal sum of ____________ Dollars on
[_______, 2001] [_______, 2006], at the office or agency of the Company referred
to below, and to pay interest thereon on _____________ and semiannually
thereafter, on ____________ and ___________ in each year and at Stated Maturity,
from ___________, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, at the rate of [______][______]%
per annum, until the principal hereof is paid or duly provided for, and (to the
extent lawful) to pay on demand interest on any overdue interest at the rate
borne by the Securities from the date on which such overdue interest becomes
payable to the date payment of such interest has been made or duly provided for.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the ______________ or ____________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall forthwith
cease to be payable to the Holder on such Regular Record Date, and such
defaulted interest, and (to the extent lawful) interest on such defaulted
interest at the rate borne by the Securities, may be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture. Payment of the principal of and interest on this
Security will be payable (i) in respect of Securities held of record by the
Depository or its nominee in the manner requested by the Depository and (ii) in
respect of Securities held of record by Holder other than the Depository or its
nominee at the office or agency of the Company maintained for such purpose in
The City of New York, or at such other office or agency of the Company as may be
maintained for such purpose, in such coin or currency of the United States of
America as at the
A-3
<PAGE> 78
time of payment is legal tender for payment of public and private debts;
provided, however, that, in the case of a Security other than a Global Security,
at the option of the Company, payment of interest may be made by check mailed to
the addresses of the Persons entitled thereto as such addresses shall appear on
the Security Register.
This Security is fully, unconditionally and irrevocably guaranteed, by
LGT Bank in Liechtenstein Aktiengesellschaft, a Liechtenstein company, as set
forth in Article XIII of the Indenture and in the Guarantee endorsed hereon.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature of an
authorized signatory, this Security including the Guarantee annexed hereto shall
not be entitled to any benefit under the Indenture, or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
LGT ASSET MANAGEMENT, INC.
By:
-------------------------------------------
By:
-------------------------------------------
Attest:
- -----------------------------
Authorized signature
A-4
<PAGE> 79
[Form of Trustee's Certificate of Authentication]
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: Citibank, N.A.,
Trustee
By:
--------------------------------
Authorized Signatory
A-5
<PAGE> 80
(Form of Reverse of Security)
This Security is one of a duly authorized series of securities of the
Company designated as its [ ] [ ]% Senior Notes due [_____________, 2006]
[___________, 2001] (herein called the ("Securities"), limited (except as
otherwise provided in the Indenture referred to below) in aggregate principal
amount to $[150,000,000] [100,000,000], which may be issued under an indenture
(herein called the "Indenture") dated as of ________________, 1996 between the
Company and Citibank, N.A., as trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Trustee and the Holders of the Securities, and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.
Other than as specified in the Guarantee, the Securities are not
redeemable prior to maturity.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Security and (b) certain restrictive
covenants and the related Defaults and Events of Default, upon compliance by the
Company or the Guarantor with certain conditions set forth therein, which
provisions apply to this Security.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Guarantor and the rights of the Holders under the Indenture at
any time by the Company, the Guarantor and the Trustee with the written consent
of the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company and the Guarantor with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by or on behalf of the Holder of
this Security shall be binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Security.
A-6
<PAGE> 81
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligations of the Company and the
Guarantor, which are absolute and unconditional, to pay the principal of and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registerable on the Security
Register of the Company, upon surrender of this Security for registration of
transfer, together with a completed Certificate of Transfer in the form of Annex
C to the Indenture, at the office or agency of the Company maintained for such
purpose in The City of New York, duly endorsed by, or accompanied by a written
instrument of transfer in the form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
Subject to the restrictions on transfer set forth on the face hereof,
the Securities are issuable only in registered form without coupons in
denominations of $1,000 and any multiple of $1,000 in excess thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
the Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to pay any tax or other governmental charge payable in connection
therewith.
Prior to the time of due presentment of this Security for registration
of transfer, the Company, the Guarantor, the Trustee and any agent of the
Company, the Guarantor or the Trustee may treat the Person in whose name this
Security is registered in the Security Register as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Guarantor, the Trustee nor any agent shall be affected by notice to the
contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
A-7
<PAGE> 82
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
A-8
<PAGE> 83
GUARANTEE
For value received, LGT Bank in Liechtenstein Aktiengesellschaft, a
company incorporated under the laws of Liechtenstein (including any successor
under the Indenture referred to in the Security upon which this Guarantee is
endorsed, the "Guarantor"), hereby fully, unconditionally and irrevocably
guarantees to the Holder of this % Senior Note due upon which this
Guarantee is endorsed, and to the Trustee for itself and on behalf of each such
Holder, the performance and payment of all obligations of the Company under the
Indenture and the Securities. In furtherance of the foregoing and not in
limitation of any other right which any Holder or the Trustee has at law or in
equity against the Guarantor by virtue hereof, upon the failure of the Company
to pay any obligation when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, or to perform or comply
with any other obligation, the Guarantor hereby promises to and will, as set
forth herein and in the Indenture, forthwith pay or cause to be paid, in cash,
to the Holders or the Trustee on behalf of the Holders (i) the unpaid principal
amount of such obligations, (ii) accrued and unpaid interest on such obligations
(to the extent not prohibited by law) and (iii) all other monetary obligations,
if any, of the Company to the Holders or the Trustee under the Indenture and on
the Securities. In the event that any payment is sought from the Guarantor in
respect of its obligations hereunder, written notice stating that amounts due
hereunder will become due and remain unpaid shall be given to the Guarantor at
the address set forth in Section 1.5 of the Indenture by the Company no later
than five Business Days prior to the respective due dates for such payment set
forth in the Indenture or in the Securities and the Guarantor agrees that it
will make any payment required on such due date or dates.
The Guarantor hereby agrees that in all respects its obligations
hereunder shall be unconditional and absolute, irrespective of the validity,
regularity or enforceability of any Security or this Indenture, the absence of
any action to enforce the same the granting of any waiver or consent by the
Holder of any such Security with respect to any provisions thereof, the
extension or renewal, in whole or in part, of any obligation of the Company on
the Indenture or the Securities, the recovery of any judgment against the
Company or any action to enforce the same, or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Except as set forth in the first paragraph hereof, the Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants
A-9
<PAGE> 84
that the Guarantees will not be discharged except by complete payment and
performance of the obligations contained in any Security and in the Guarantees.
The Guarantor further agrees that its guarantee herein shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any obligation by the Company is rescinded or must otherwise be
restored by any Holder or the Trustee upon the bankruptcy or reorganization of
the Company or otherwise or if any such payment, or any part thereof, by the
Guarantor is rescinded or must otherwise be restored by any Holder or the
Trustee and such payment or such part is repaid to the Guarantor.
The Guarantor further agrees, to the fullest extent that it may
lawfully do so, that, as between the Guarantor, on the one hand, and the Holders
and the Trustee, on the other hand, the maturity of obligations guaranteed
hereby may be accelerated as provided in Section 5.2 of the Indenture hereof for
the purposes of the Guarantees, notwithstanding any stay, injunction or other
prohibition extant under any applicable bankruptcy law preventing such
acceleration in respect of the obligations guaranteed hereby.
If it is determined by the Guarantor that (i) the Guarantor would be
required, pursuant to the Indenture, to pay Additional Amounts (as defined
below) in respect of principal, or interest, if any, on the next succeeding date
for the payment thereof, or (ii) any tax would be imposed (whether by way of
deduction, withholding or otherwise) by Liechtenstein (or the jurisdiction of
incorporation of a successor corporation to the Guarantor pursuant to the
Indenture) or by any political subdivision or taxing authority thereof or
therein, upon or with respect to any principal or interest, if any, received or
receivable by the Company from the Guarantor or any of its subsidiaries,
incorporated in, or resident for tax purposes under the laws of Liechtenstein
(or the jurisdiction of incorporation of a successor corporation to the
Guarantor), the Guarantor or the Company may, at their option, redeem such
Securities in whole at any time upon not more than 60 days' nor less than 30
days' prior notice to the Trustee and the Holders of such Securities at a
redemption price equal to 100 percent of the principal amount thereof plus
accrued interest to the date fixed for redemption; provided, however, that no
such redemption shall occur when, in the Guarantor's reasonable determination,
it in not unduly burdensome for the Company or the Guarantor to avoid the
obligation to pay Additional Amounts.
The Guarantor hereby further agrees that any amounts to be paid by the
Guarantor under this Guarantee shall be paid without deduction or withholding
for any and all present and future taxes, levies, imposts or other governmental
charges whatsoever imposed, assessed, levied or collected by or for the account
of Liechtenstein (or any jurisdiction of a successor
A-10
<PAGE> 85
entity of the Guarantor) or any political subdivision or taxing authority
thereof or therein or, if deduction or withholding of any such taxes, levies,
imposts or other governmental charges shall at any time be required by
Liechtenstein (or any jurisdiction of a successor entity of the Guarantor) or
any such subdivision or authority, the Guarantor will pay such additional amount
("Additional Amounts") in respect of principal and interest, if any, as may be
necessary in order that the net amounts paid to the Holder of such Security or
the Trustee under the Indenture, as the case may be, pursuant to this Guarantee,
after such deduction or withholding, shall equal the respective amounts of
principal and interest, if any, as specified in the Security to which such
Holder or the Trustee is entitled; provided, however, that the foregoing shall
not apply to (i) any present or future taxes, levies, imposts or other
governmental charges which would not have been so imposed, assessed, levied or
collected but for the fact that the Holder or beneficial owner of such Security
is or has been a domiciliary, national or resident of, or engaging or having
been engaged in business or maintaining or having maintained a permanent
establishment or being or having been physically present in, Liechtenstein (or
any jurisdiction of a successor entity of the Guarantor) or such political
subdivision or otherwise having or having had some connection with Liechtenstein
(or any jurisdiction of a successor entity of the Guarantor) or such political
subdivision other than the holding or ownership of a Security, or the collection
of, principal of, and interest, if any, on, or the enforcement of, a Security or
Guarantee, (ii) any present or future taxes, levies, imposts or other
governmental charges which would not have been so imposed, assessed, levied or
collected but for the fact that, where presentation is required, such Security
was presented more than thirty days after the date such payment became due or
was provided for, whichever is later, (iii) any present or future taxes, levies,
imposts or other governmental charges which are payable otherwise than by
deduction or withholding from payments on or in respect of such Security or the
Guarantees, (iv) any present or future taxes, levies, imposts or other
governmental charges which would not have been so imposed, assessed, levied or
collected but for the failure to comply with any certification, identification
or other reporting requirements concerning the nationality, residence, identity
or connection with Liechtenstein (or any jurisdiction of a successor entity of
the Guarantor) or any political subdivision thereof of the Holder or beneficial
owner of such Security, if compliance is required by statute or by regulation of
Liechtenstein or such political subdivision as a condition to relief or
exemption from such taxes, levies, imposts or other governmental charges,
provided that any such reporting requirement, in the Guarantor's reasonable
determination, is not materially more burdensome than would be required under
U.S. Federal income tax withholding rules in a comparable situation, (v) any
present or future taxes, levies, imposts or other governmental charges (A) which
would not have been so imposed,
A-11
<PAGE> 86
assessed, levied or collected if the beneficial owner of such security had been
the Holder of such Security or (B) which, if the beneficial owner of such
Security held the Security as the Holder of such Security, would have been
excluded pursuant to clauses (i) through iv) inclusive above, provided that this
exception shall not apply as a result of the Depository being the Holder or (vi)
any estate, inheritance, gift, sale, transfer, personal property or similar tax,
assessment or other governmental charge.
The Guarantor shall be subrogated to all rights of the Holder of any
Securities and the Trustee against the Company in respect of any amounts paid to
the Holder and the Trustee by the Guarantor pursuant to the provisions of this
Guarantee; provided, however, that the Guarantor shall not be entitled to
enforce, or to receive any payments arising out of or based upon, such right of
subrogation until the principal, and interest on all of the Securities, and the
obligations set forth in Section 6.6 of the Indenture, shall have been paid in
full.
A-12
<PAGE> 87
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Security upon which this Guarantee is
endorsed shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
LGT BANK IN LIECHTENSTEIN AKTIENGESELLSCHAFT
By:
-----------------------------------------
By:
-----------------------------------------
Attest
----------------------------
A-13
<PAGE> 88
[FOR GLOBAL SECURITY]
SCHEDULE OF EXCHANGES
The following exchanges of a part of this Security in global form for
either definitive Securities or part of another Security in global form or of
either definitive Securities or part of another Security in global form for a
part of this Security in global form have been made:
<TABLE>
<CAPTION>
Principal
Amount of Amount of Amount of
decrease in increase in this Security Signature of
Principal Principal in global authorized
Amount of Amount of form fol- signatory of
this Security this Security lowing such Trustee or
Date of in global in global decrease (or Securities
Exchange form form increase) Custodian
- -------- -------------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C>
</TABLE>
A-14
<PAGE> 89
ANNEX B
TRANSFEREE LETTER OF REPRESENTATION
LGT Asset Management, Inc.
c/o the Trustee
Ladies and Gentlemen:
This letter is delivered by the undersigned to request a transfer of $
principal amount of the Senior Notes due [2001] [2006] (the "Securities") of LGT
Asset Management, Inc. ("Company"). The Securities are described in that certain
Offering Memorandum (the "Offering Memorandum") dated December , 1996 relating
to the offering of the Securities. We acknowledge receipt of the Offering
Memorandum and acknowledge that we have read the Offering Memorandum, including
the information on pages 1-3 thereof and in the section title "Notice to
Investors," have had access to such financial and other information and have
been afforded the opportunity to ask such questions of representatives of the
Company and LGT Bank in Liechtenstein Aktiengesellschaft (the "Bank") and
receive answers thereto, as we deem necessary in connection with our decision to
purchase the Securities.
Upon transfer, the Securities would be registered in the name of the
undersigned:
Name:
-----------------------------------
Address:
--------------------------------
Taxpayer ID Number:
---------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor," to which we exercise sole investment
discretion, and we are acquiring the Securities for investment purposes and not
with a view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act and we have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of our investment in the Securities and invest in or purchase securities
similar to the Securities, in the normal course of our business, and we, and any
accounts for which we are acting, are each able to bear the economic risk of our
or its investment. We confirm that neither the Company nor the Bank nor any
person acting on their behalf has offered to sell the Securities by, and that we
have not been made aware of the offering of the Securities by,
B-1
<PAGE> 90
any form of general solicitation or general solicitation or general advertising,
including, but not limited to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio.
2. We understand that the Securities have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Securities to offer, sell or otherwise
transfer such Securities prior to the date which is three years after the later
of the date of original issue and the last date on which the Company or any
affiliate of the Company was the owner of such Securities (or any predecessor
thereto) (the "Resale Restriction Termination Date") only (a) to the Company or
to the Bank, (b) pursuant to a registration statement that has been declared
effective under the Securities Act, (c) so long as the Securities are eligible
for resale pursuant to Rule 144A under Securities Act ("Rule 144A"), to a person
we reasonably believe is a qualified institutional buyer under Rule 144A (a
"QIB") who purchases for its own account or for the account of a QIB and to whom
notice is given that the transfer is being made in reliance on Rule 144A, (d) in
an offshore transaction in accordance with Regulation S under the Securities
Act, (e) to an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act who is purchasing for its
own account or for the account of any institutional "accredited investor" for
investment it purposes and not with a view to, or for offer or sale, in
connection with. any distribution in violation of the Securities Act or (f)
pursuant to any other available exemption from the registration requirements of
the Securities Act, subject in each of the foregoing cases to any requirement of
law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Securities is proposed to be made
pursuant to clause (e) above prior to the Resale Restriction Termination Date,
the transferor shall deliver a letter from the transferee substantially in the
form of this letter to the Company and the trustee (the "Trustee") under the
indenture dated as of December , 1996, between the Company, the Bank and the
Trustee relating to the Securities, which shall provide, among other things,
that the transferee is an institutional "accredited investor" within the meaning
of rule 501(a)(1), (2), (3) or (7) under Securities Act and that it is acquiring
such Securities for investment purposes and not with a view to, or for offer,
sale or other transfer of the Securities in connection with, any distribution in
violation of the Securities Act. We acknowledge that the Company reserves the
right prior to any offer, sale pursuant to Clause (d), (e) or (f) above to
require the delivery of any opinion of counsel, certifications and/or other
information satisfactory to it. Each purchaser acknowledges that Securities may
only be transferred to institutional accredited investors in minimum principal
amounts of $250,000.
3. We understand that the Securities will be in the form of definitive
physical certificates bearing the legend set forth in clause (5) in the "Notice
to Investors" section of the Offering Memorandum.
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<PAGE> 91
We acknowledge that you, the Initial Purchasers and others will rely
upon our confirmations, acknowledgements and agreements set forth herein, and we
agree to notify you promptly in writing if any of our representations and
warranties herein ceases to accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
-----------------------------------------
By:
------------------------------
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<PAGE> 92
Annex C
Form of Certificate of Transfer
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers this Security to
- ------------------------------------------------------------------------------
(please typewrite or print name and taxpayer
identification number)
- ------------------------------------------------------------------------------
(please typewrite or print address)
and hereby irrevocably constitutes and appoints_____________________________his
attorney to transfer the same on the books of the Company, with full power of
substitution in the premises.
In connection with any transfer of all or any portion of the
Security evidenced by this certificate for as long as such Security is a
Restricted Security, the undersigned confirms that such Security is being
transferred:
[ ] Pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended (the "Securities Act"):
[ ] In an offshore transaction in accordance with Regulations S under
the Securities Act:
or
[ ] To an institutional "accredited investor" within the meaning of
subparagraphs (a)(1),(2),(3) or (7) of Rule 501 under the Securities
Act that is acquiring the Security for its own account or for the
account of such an institutional "accredited investor" for
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of Securities Act
(and if transferring the Security to an institutional "accredited
investor" such institutional "accredited investor" is acquiring not
less than $250,000 principal amount of the Securities).
Unless one of the boxes above is checked, the Trustee will
refuse to register all or any portion of the Security evidenced by this
certificate in the name of any person other than the registered holder thereof
(or hereof); provided, however, that the Trustee shall register the transfer of
such security if it has received an officers' certificate from the Company
stating that the Company has received such certifications, legal opinions
and/or other information as it has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
In addition, if the transferee is an institutional
accredited investor or in an offshore transaction in accordance with Regulation
S the Securities Act, the holder must furnish to the Trustee and the Company and
the Trustee shall refuse to register such Security in the name of anyone other
than the registered holder thereof if it does not receive (i) a signed letter
substantially in the form of Annex B to the Indenture containing certain
representations and agreements relating to the restrictions on transfer of the
security evidenced hereby, and (ii) such other certifications, legal opinions or
other information as the Company may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act, and in
accordance with the provision thereof.
Date:
Signature
------------------------------
NOTE: The signature to this agreement must correspond with the name as written
upon the face of this Security in every particular, without alteration or
enlargement, or any change whatever.
<PAGE> 1
EXHIBIT 3.29
[BANK IN LIECHTENSTEIN LETTERHEAD]
VADUZ, DECEMBER 14, 1995
LOAN AGREEMENT
Dear Sirs,
With reference to our various discussions, we are pleased to make available to
you a credit line on the following terms and conditions:
BORROWER
LGT BIL Ltd., George Town, Grand Cayman, Cayman Islands
(hereinafter also referred to as "Borrower")
LENDER
Bank in Liechtenstein Aktiengesellschaft
Herrengasse 12, FL-9490 Vaduz, Principality of Liechtenstein
(hereinafter also referred to as "Lender")
The Lender reserves the right to transfer or assign the whole loan amount or
any part thereof to any of its directly or indirectly controlled group
companies, or to any other BIL GT Group company.
LOAN AMOUNT
DM 120'000'000.--(Deutsch Marks one hundred twenty million)
PURPOSE
For the acquisition of a share in the partnership of LGT BIL Ltd. & Co.,
Frankfurt, and for general business purposes.
Herrengasse 12 Telephone 075 235 1122
FL-9490 Vaduz Telefax 075 235 1850
Principality of Liechtenstein Telex 889 222
<PAGE> 2
PAGE 2
[LOGO]
UTILISATION
This credit line shall be available for overdrafts on the current account
and/or fixed term advances with maturities of up to 12 months.
PAYOUT
First payout of DM 117 million to the Borrower's DM account held with the
Lender, with value December 18, 1995.
TERM/DURATION
This credit line will be valid until further notice. It may be cancelled at any
time by either the Borrower or the Lender in accordance with the Lender's
"General Business Conditions". In the event of such cancellation, all
outstanding principal, interest and fees shall become immediately due for
repayment.
INTEREST RATE
a. The interest rate for fixed term advances is 1.0% (one percent) per annum in
excess of the rate at which deposits in Deutsche Marks for terms of up to 12
months would be offered by the Lender to Prime Banks in the London
inter-bank market, 2 (two) business days prior to the first day of each
interest period.
Interest will be calculated on the basis of exact number of days elapsed,
divided by a 360-day-year (365/360) and will be payable at the end of each
interest period, but at least semi-annually in arrears.
If any payment date shall fall on a day on which banks in Vaduz are not open
for business, such payment shall be extended to the next succeeding business
day unless such business day falls in the next calendar month, in which event
such due date shall be the immediately preceding business day.
b. The interest rate for overdrafts on the current account in Deutsch Marks is
6.25% (six and one quarter per cent) per annum, to be charged quarterly in
arrears, calculated on the basis of the average daily outstanding loan
amount. This rate is applicable until further notice and is subject to change
in accordance with prevailing market conditions.
SECURITY
Pledge and assignment with the enclosed form "General Deed of Pledge and
Declaration of Assignment" of the Borrower's partnership in the amount of DM
130'000'000 in LGT BIL Ltd. & Co., Frankfurt.
<PAGE> 3
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PAGE 3
MISCELLANEOUS
The relationship between the Borrower and the Lender is further subject to the
Lender's "General Business Conditions", but only to the extent that such
"General Business Conditions" are not in conflict with the terms, conditions and
provisions of this agreement. In the event of conflict, the terms and conditions
of this agreement shall prevail.
PAYMENTS AND TAXES
All payments to be made by the Borrower to the Lender under this agreement shall
be made in the currencies, as they will be outstanding under this agreement,
freely disposable outside of bilateral or multilateral payment agreements which
may exist at the time of payment, free and clear of and without deduction of any
taxes, levies, imposts, duties, charges, fees, deductions or withholdings of any
nature, now or hereafter imposed by or on behalf of any taxing authority or any
other entity.
If deduction of any such taxes or other charges referred to above at any time
during the validity of this agreement be required, the Borrower shall pay such
amount in respect of principal and interest as may be necessary in order that
the amounts effectively received by the Lender after such deduction shall equal
the respective amounts of principal and interest which have been claimed by the
Lender as if no deduction had been made.
NEGATIVE PLEDGE CLAUSE
The Borrower undertakes that, so long as any sum remains available or
outstanding under this agreement, it will not, without the prior written consent
of the Lender, which shall not be unreasonably withheld, create, assume or
permit to exist any encumbrances over any of its present or future revenues or
assets save for encumbrances which arise in the ordinary course of business.
CHANGE OF OWNERSHIP
The Lender reserves the right to demand immediate repayment of all outstandings
and to cancel any unused portions of the facility, at any time at its sole
discretion, should the ultimate ownership of the Borrower by BIL GT Group Ltd.
cease to be 100%.
REPRESENTATIONS AND WARRANTIES
The Borrower represents that upon signing the relevant documentation:
a. The making, performance and delivery of this Agreement are within the
corporate powers, the terms of the By-laws of the Borrower and have been duly
authorised by all necessary corporate actions, and do not contravene any laws
or any contractual restrictions binding on the Borrower.
b. The Borrower has the full power, authority and legal right to execute and
deliver this loan agreement and perform the obligations hereunder.
c. This Agreement when executed and delivered will be a legal, valid and a
binding obligation of the Borrower, enforceable in accordance with its
respective terms.
<PAGE> 4
[LOGO]
PAGE 4
d. To the best of its knowledge, there are no pending or threatened actions or
proceedings, before any court or administrative agency which may materially
adversely affect the Borrower's financial ability to fulfil its obligations
hereunder.
e. No material adverse change has taken place in its financial condition since
the end of the latest accounting period in respect of which its accounts have
been audited.
f. No event described in Acceleration Clause below has occurred and is still
outstanding.
The Borrower shall be deemed to repeat the above representations on each
drawdown and renewal of a drawing under this facility.
CONDITIONS PRECEDENT
This agreement is made under the condition and the Lender's obligation to make
this loan available is subject to the conditions precedent that the Lender shall
have received and approved the following:
a. Form "General Deed of Pledge and Declaration of Assignment" as described
under "Security".
b. A certified copy of the Resolution of the Board of Directors of the Borrower
approving the execution, delivery and performance of this agreement and
stipulating the name(s) of the Officer(s) or Representative(s) of the
Borrower authorised to sign this agreement.
c. Drawdown instructions in writing.
d. Such legal opinions as the Lender shall in its sole discretion deem
necessary.
ACCELERATION CLAUSE
In the event that the borrower fails to comply with any of the terms and
conditions contained in this agreement, or any other loan or credit arrangement
between the Borrower and a third party, the Lender shall have the right at any
time after such occurrence without need of further legal formality, to declare
by notice in writing to the Borrower, the principal of and accrued interest on
the then outstanding advances, plus any and all fees and charges whatsoever, to
become immediately due and payable.
LAW GOVERNING THE LEGAL RELATIONSHIP BETWEEN THE LENDER AND THE BORROWER AND
PLACE OF JURISDICTION
All legal aspects of the relationship between the Borrower and the Lender shall
be governed by Liechtenstein law. The place of performance, the exclusive place
of jurisdiction for lawsuits and all other kinds of legal proceedings and place
of foreclosure shall be the domicile of Bank in Liechtenstein
Aktiengesellschaft, 9490 Vaduz.
The Lender reserves the right to bring legal proceedings against the Borrower
before any competent court at the domicile of the Borrower or any other court
having jurisdiction over the Borrower.
---------------------------------------------------------------------
<PAGE> 5
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Page 5
We hope that the above terms and conditions meet your requirements, and kindly
request that you duly sign and return to us the enclosed duplicate of this Loan
Agreement.
Yours faithfully,
BANK IN LIECHTENSTEIN
Aktiengesellschaft
/s/ DR. U. GAHWILER /s/ P. WIDMER
Dr. U. Gahwiler P. Widmer
Enclosures
Duplicate of the Loan Agreement
General Deed of Pledge and Declaration of Assignment
General Business Conditions
To Bank in Liechtenstein Aktiengesellschaft, Vaduz:
We fully agree with and accept all of the terms and conditions contained in the
above-mentioned agreement.
Place/Date: Vaduz, 14.12.1995 /s/ [ILLEGIBLE]
---------------------- ------------------------------
LGT BIL LTD.
<PAGE> 6
[LGT BANK IN LIECHTENSTEIN LETTERHEAD]
Vaduz, January 7, 1997
SFI/mat/tal
AMENDMENT TO THE LOAN AGREEMENT DATED DECEMBER 14, 1995
Dear Sirs,
Reference is made to the recent telephone conversation with Mr. Ivo Enderli and
Mr. Michael Burge. As agreed and subsequent to the effected partial loan
repayment, we are pleased to confirm to you that the clause "Loan Amount" in
the above-mentioned Loan Agreement has been amended and reads now as follows:
LOAN AMOUNT
DEM 70'000'000 - (Deutsch Marks seventy million)
-------------------
All other terms and conditions as stated in the Loan Agreement dated December
14, 1995 remain unchanged.
We hope that the above amendment will meet with your requirements and would
appreciate your duly signing and returning to us the enclosed duplicate of this
agreement.
Yours faithfully,
LGT Bank in Liechtenstein
Aktiengesellschaft
/s/ P. WIDMER /s/ E. MATTLE
P. Widmer E. Mattle
