Table of Contents     

    

                                    

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
OR
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 1-13908
INVESCOLOGOA02A03A04A01A03.GIF
Invesco Ltd.
(Exact Name of Registrant as Specified in Its Charter)
Bermuda
(State or Other Jurisdiction of Incorporation or Organization)
 
98-0557567
(I.R.S. Employer Identification No.)
 
 
 
1555 Peachtree Street, N.E., Suite 1800, Atlanta, GA
(Address of Principal Executive Offices)
 
30309
(Zip Code)

(404) 892-0896
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ
 
Accelerated filer o
 
Non-accelerated filer o (Do not check if a smaller reporting company)
 
Smaller reporting company o
 
 
 
 
 
 
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes o No þ
As of September 30, 2017 , the most recent practicable date, the number of Common Shares outstanding was 407,078,530 .

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Table of Contents     

    

                                    

TABLE OF CONTENTS
We include cross references to captions elsewhere in this Quarterly Report on Form 10-Q, which we refer to as this “Report,” where you can find related additional information. The following table of contents tells you where to find these captions.
 
 
 
Page
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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Table of Contents     

    

                                    

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Invesco Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)

 
As of
$ in millions, except per share data
September 30, 2017
 
December 31, 2016
ASSETS
 
 
 
Cash and cash equivalents
1,716.3

 
1,328.0

Unsettled fund receivables
830.4

 
672.9

Accounts receivable
548.5

 
544.2

Investments
690.9

 
795.3

Assets of consolidated investment products (CIP):
 
 
 
Cash and cash equivalents of CIP
485.9

 
742.2

Accounts receivable and other assets of CIP
69.1

 
106.2

Investments of CIP
5,124.3

 
5,116.1

Assets held for policyholders
12,102.6

 
8,224.2

Prepaid assets
122.8

 
116.9

Other assets
64.1

 
95.0

Property, equipment and software, net
483.0

 
464.7

Intangible assets, net
1,561.2

 
1,399.4

Goodwill
6,573.4

 
6,129.2

Total assets
30,372.5

 
25,734.3

LIABILITIES
 
 
 
Accrued compensation and benefits
608.5

 
654.3

Accounts payable and accrued expenses
901.9

 
812.4

Liabilities of CIP:
 
 
 
Debt of CIP
4,323.6

 
4,403.1

Other liabilities of CIP
339.9

 
673.4

Policyholder payables
12,102.6

 
8,224.2

Unsettled fund payables
810.8

 
659.3

Long-term debt
2,075.3

 
2,102.4

Deferred tax liabilities, net
351.5

 
309.7

Total liabilities
21,514.1

 
17,838.8

Commitments and contingencies (See Note 11)


 


TEMPORARY EQUITY
 
 
 
Redeemable noncontrolling interests in consolidated entities
309.6

 
283.7

PERMANENT EQUITY
 
 
 
Equity attributable to Invesco Ltd.:
 
 
 
Common shares ($0.20 par value; 1,050.0 million authorized; 490.4 million shares issued as of September 30, 2017 and December 31, 2016)
98.1

 
98.1

Additional paid-in-capital
6,248.1

 
6,227.4

Treasury shares
(2,783.5
)
 
(2,845.8
)
Retained earnings
5,199.8

 
4,833.4

Accumulated other comprehensive income/(loss), net of tax
(448.5
)
 
(809.3
)
Total equity attributable to Invesco Ltd.
8,314.0

 
7,503.8

Equity attributable to nonredeemable noncontrolling interests in consolidated entities
234.8

 
108.0

Total permanent equity
8,548.8

 
7,611.8

Total liabilities, temporary and permanent equity
30,372.5

 
25,734.3

See accompanying notes.

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Invesco Ltd.
Condensed Consolidated Statements of Income
(Unaudited)

 
Three months ended September 30,
 
Nine months ended September 30,
$ in millions, except per share data
2017
 
2016
 
2017
 
2016
Operating revenues:
 
 
 
 
 
 
 
Investment management fees
1,062.3

 
965.9

 
3,027.9

 
2,826.2

Service and distribution fees
217.6

 
213.4

 
635.3

 
614.5

Performance fees
42.3

 
3.4

 
70.3

 
26.8

Other
15.5

 
18.9

 
51.2

 
72.2

Total operating revenues
1,337.7

 
1,201.6

 
3,784.7

 
3,539.7

Operating expenses:
 
 
 
 
 
 
 
Third-party distribution, service and advisory
380.4

 
362.1

 
1,095.6

 
1,057.7

Employee compensation
393.1

 
345.1

 
1,155.5

 
1,039.8

Marketing
29.5

 
26.4

 
83.0

 
79.6

Property, office and technology
92.8

 
78.2

 
267.3

 
240.4

General and administrative
86.6

 
83.5

 
250.5

 
240.0

Total operating expenses
982.4

 
895.3

 
2,851.9

 
2,657.5

Operating income
355.3

 
306.3

 
932.8

 
882.2

Other income/(expense):
 
 
 
 
 
 
 
Equity in earnings of unconsolidated affiliates
12.9

 
5.5

 
41.1

 
(2.1
)
Interest and dividend income
2.5

 
2.6

 
7.0

 
8.7

Interest expense
(23.6
)
 
(23.9
)
 
(71.2
)
 
(69.9
)
Other gains and losses, net
18.9

 
16.2

 
27.6

 
7.3

Other income/(expense) of CIP, net
31.7

 
39.0

 
92.5

 
69.4

Income before income taxes
397.7

 
345.7

 
1,029.8

 
895.6

Income tax provision
(123.1
)
 
(89.8
)
 
(291.4
)
 
(245.4
)
Net income
274.6

 
255.9

 
738.4

 
650.2

Net (income)/loss attributable to noncontrolling interests in consolidated entities
(7.1
)
 
(14.7
)
 
(19.3
)
 
(22.5
)
Net income attributable to Invesco Ltd.
267.5

 
241.2

 
719.1

 
627.7

Earnings per share:
 
 
 
 
 
 
 
-basic

$0.65

 

$0.58

 

$1.76

 

$1.51

-diluted

$0.65

 

$0.58

 

$1.76

 

$1.51

Dividends declared per share

$0.29

 

$0.28

 

$0.86

 

$0.83


See accompanying notes.


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Invesco Ltd .
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
Three months ended September 30,
 
Nine months ended September 30,
$ in millions
2017
 
2016
 
2017
 
2016
Net income
274.6

 
255.9

 
738.4

 
650.2

Other comprehensive income/(loss), net of tax:
 
 
 
 
 
 
 
Currency translation differences on investments in foreign subsidiaries
142.4

 
(63.4
)
 
352.4

 
(132.8
)
Actuarial (loss)/gain related to employee benefit plans
—

 
—

 
(0.4
)
 
(0.4
)
Reclassification of prior service cost/(credit) into employee compensation expense
—

 
(1.8
)
 
—

 
(5.2
)
Reclassification of actuarial (gain)/loss into employee compensation expense
5.3

 
0.4

 
6.4

 
1.2

Share of other comprehensive income/(loss) of equity method investments
(0.1
)
 
2.4

 
1.1

 
3.0

Unrealized gains/(losses) on available-for-sale investments
(0.2
)
 
2.3

 
3.8

 
4.0

Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net
(1.7
)
 
(0.2
)
 
(2.5
)
 
(0.5
)
Other comprehensive income/(loss)
145.7

 
(60.3
)
 
360.8

 
(130.7
)
Total comprehensive income/(loss)
420.3

 
195.6

 
1,099.2

 
519.5

Comprehensive loss/(income) attributable to noncontrolling interests in consolidated entities
(7.1
)
 
(14.2
)
 
(19.3
)
 
(19.5
)
Comprehensive income/(loss) attributable to Invesco Ltd.
413.2

 
181.4

 
1,079.9

 
500.0

See accompanying notes.



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Invesco Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Nine months ended September 30,
$ in millions
2017
 
2016
Operating activities:
 
 
 
Net income
738.4

 
650.2

Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
 
 
 
Amortization and depreciation
82.2

 
75.5

Share-based compensation expense
134.9

 
118.4

Other (gains)/losses, net
(27.6
)
 
(7.3
)
Other (gains)/losses of CIP, net
(53.4
)
 
(18.1
)
Equity in earnings of unconsolidated affiliates
(41.1
)
 
2.1

Dividends from unconsolidated affiliates
2.2

 
16.3

Changes in operating assets and liabilities:
 
 
 
(Increase)/decrease in cash held by CIP
251.7

 
(66.2
)
(Purchase)/sale of investments by CIP, net
(277.7
)
 
(131.9
)
(Purchase)/sale of trading investments, net
146.8

 
(13.4
)
(Increase)/decrease in receivables
(3,134.3
)
 
(2,257.5
)
Increase/(decrease) in payables
3,189.9

 
2,213.7

Net cash provided by/(used in) operating activities
1,012.0

 
581.8

Investing activities:
 
 
 
Purchase of property, equipment and software
(82.7
)
 
(101.3
)
Purchase of available-for-sale investments
(7.8
)
 
(4.3
)
Sale of available-for-sale investments
76.4

 
38.4

Purchase of investments by CIP
(4,432.4
)
 
(2,398.0
)
Sale of investments by CIP
4,219.6

 
1,835.9

Purchase of other investments
(115.7
)
 
(98.3
)
Sale of other investments
77.8

 
67.7

Returns of capital and distributions from unconsolidated partnership investments
74.0

 
30.0

Purchase of business
(299.2
)
 
(121.9
)
Net cash provided by/(used in) investing activities
(490.0
)
 
(751.8
)
Financing activities:
 
 
 
Purchases of treasury shares
(58.6
)
 
(424.7
)
Dividends paid
(352.7
)
 
(346.3
)
Excess tax benefits from share-based compensation
—

 
(2.4
)
Third-party capital invested into CIP
397.7

 
193.9

Third-party capital distributed by CIP
(93.2
)
 
(64.1
)
Borrowings of debt by CIP
1,887.4

 
760.1

Repayments of debt by CIP
(1,962.4
)
 
(130.2
)
Net borrowings/(repayments) under credit facility
(28.7
)
 
—

Payment of contingent consideration
(10.3
)
 
(9.5
)
Net cash provided by/(used in) financing activities
(220.8
)
 
(23.2
)
Increase/(decrease) in cash and cash equivalents
301.2

 
(193.2
)
Foreign exchange movement on cash and cash equivalents
87.1

 
(76.9
)
Cash and cash equivalents, beginning of period
1,328.0

 
1,851.4

Cash and cash equivalents, end of period
1,716.3

 
1,581.3

Supplemental Cash Flow Information:
 
 
 
Interest paid
(64.8
)
 
(60.4
)
Interest received
3.2

 
4.0

Taxes paid
(200.6
)
 
(148.1
)
See accompanying notes.

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Table of Contents     

    

                                    

Invesco Ltd.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
 
Equity Attributable to Invesco Ltd.
 
 
 
 
 
 
$ in millions
Co mmon  Shares
 
Additional Paid-in-Capital
 
Treasury Shares
 
Retained Earnings
 
Accumulated Other Comprehensive Income/(Loss)
 
Total Equity Attributable to Invesco Ltd.
 
Nonredeemable Noncontrolling Interests in Consolidated Entities
 
Total Permanent Equity
 
Redeemable Noncontrolling Interests in Consolidated Entities Temporary Equity
January 1, 2017
98.1

 
6,227.4

 
(2,845.8
)
 
4,833.4

 
(809.3
)
 
7,503.8

 
108.0

 
7,611.8

 
283.7

Net income
—

 
—

 
—

 
719.1

 
—

 
719.1

 
(6.3
)
 
712.8

 
25.6

Other comprehensive income
—

 
—

 
—

 
—

 
360.8

 
360.8

 
—

 
360.8

 
—

Change in noncontrolling interests in consolidated entities, net
—

 
—

 
—

 
—

 
—

 
—

 
133.1

 
133.1

 
0.3

Dividends
—

 
—

 
—

 
(352.7
)
 
—

 
(352.7
)
 
—

 
(352.7
)
 
—

Employee share plans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
—

 
134.9

 
—

 
—

 
—

 
134.9

 
—

 
134.9

 
—

Vested shares
—

 
(116.4
)
 
116.4

 
—

 
—

 
—

 
—

 
—

 
—

Settlement of ESPP purchases
—

 
2.1

 
3.9

 
—

 
—

 
6.0

 
—

 
6.0

 
—

Other share awards
—

 
0.1

 
0.6

 
—

 
—

 
0.7

 
—

 
0.7

 
—

Purchase of shares
—

 
—

 
(58.6
)
 
—

 
—

 
(58.6
)
 
—

 
(58.6
)
 
—

September 30, 2017
98.1

 
6,248.1

 
(2,783.5
)
 
5,199.8

 
(448.5
)
 
8,314.0

 
234.8

 
8,548.8

 
309.6


See accompanying notes.

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Invesco Ltd.
Consolidated Statements of Changes in Equity (continued)
(Unaudited)
 
Equity Attributable to Invesco Ltd.
 
 
 
 
 
 
$ in millions
Co mmon  Shares
 
Additional Paid-in-Capital
 
Treasury Shares
 
Retained Earnings
 
Accumulated Other Comprehensive Income
 
Total Equity Attributable to Invesco Ltd.
 
Nonredeemable Noncontrolling Interests in Consolidated Entities
 
Total Permanent Equity
 
Redeemable Noncontrolling Interests in Consolidated Entities Temporary Equity
January 1, 2016
98.1

 
6,197.7

 
(2,404.1
)
 
4,439.6

 
(446.0
)
 
7,885.3

 
810.4

 
8,695.7

 
167.3

Adjustment for adoption of ASU 2015-02
—

 
—

 
—

 
—

 
—

 
—

 
(733.5
)
 
(733.5
)
 
226.6

January 1, 2016, as adjusted
98.1

 
6,197.7

 
(2,404.1
)
 
4,439.6

 
(446.0
)
 
7,885.3

 
76.9

 
7,962.2

 
393.9

Net income
—

 
—

 
—

 
627.7

 
—

 
627.7

 
(2.0
)
 
625.7

 
24.5

Other comprehensive income
—

 
—

 
—

 
—

 
(127.7
)
 
(127.7
)
 
—

 
(127.7
)
 
(3.0
)
Change in noncontrolling interests in consolidated entities, net
—

 
—

 
—

 
—

 
—

 
—

 
12.7

 
12.7

 
(68.4
)
Dividends
—

 
—

 
—

 
(346.3
)
 
—

 
(346.3
)
 
—

 
(346.3
)
 
—

Employee share plans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
—

 
118.4

 
—

 
—

 
—

 
118.4

 
—

 
118.4

 
—

Vested shares
—

 
(96.4
)
 
96.4

 
—

 
—

 
—

 
—

 
—

 
—

Other share awards
—

 
0.6

 
6.0

 
—

 
—

 
6.6

 
—

 
6.6

 
—

Tax impact of share-based payment
—

 
(2.4
)
 
—

 
—

 
—

 
(2.4
)
 
—

 
(2.4
)
 
—

Purchase of shares
—

 
(11.4
)
 
(413.5
)
 
—

 
—

 
(424.9
)
 
—

 
(424.9
)
 
—

September 30, 2016
98.1

 
6,206.5

 
(2,715.2
)
 
4,721.0

 
(573.7
)
 
7,736.7

 
87.6

 
7,824.3

 
347.0


See accompanying notes.


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Invesco Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1 .   ACCOUNTING POLICIES
Corporate Information
Invesco Ltd. (Parent) and all of its consolidated entities (collectively, the company or Invesco) provide retail and institutional clients with an array of global investment management capabilities. The company operates globally and its sole business is investment management.
Certain disclosures included in the company's annual report on Form 10-K for the year ended December 31, 2016 (annual report or Form 10-K) are not required to be included on an interim basis in the company's quarterly reports on Forms 10-Q (Report). The company has condensed or omitted these disclosures. Therefore, this Report should be read in conjunction with the company's annual report.
Basis of Accounting and Consolidation
The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with rules and regulations of the Securities and Exchange Commission and consolidate the financial statements of the Parent and all of its controlled subsidiaries. In the opinion of management, the financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair statement of the financial condition and results of operations for the periods presented. All significant intercompany transactions, balances, revenues and expenses are eliminated upon consolidation.
Money Market Fee Waivers
The company is currently voluntarily providing yield support waivers of its management fees on certain money market funds to ensure that they maintain a minimum level of daily net investment income. During the three and nine months ended September 30, 2017 , yield support waivers resulted in a reduction of investment management and service and distribution fees of approximately $0.9 million and $3.9 million , respectively. During the three and nine months ended September 30, 2017 , approximately 72% and 68% , respectively, of yield support waivers are offset by a reduction in third party distribution, service and advisory expenses, resulting in a net waiver of $0.2 million and $1.3 million for the three and nine months ended September 30, 2017 , respectively. The company has provided yield support waivers in prior periods and may increase or decrease the level of fee waivers in future periods.
Accounting Pronouncements Recently Adopted and Pending Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09) which revises revenue recognition criteria and expands disclosure requirements. This new guidance will be effective for interim and annual reporting periods beginning after December 15, 2017. The company will implement this new accounting standard on January 1, 2018. However, a decision on the adoption method has not been made as of the date of this Report. The underlying premise of the new guidance requires the employment of a five step model to determine the amount of revenue that reflects the consideration to which the company expects to be entitled for the transfer of services to customers and the timing of recognition. In addition, ASU 2014-09 also requires certain costs to obtain and fulfill contracts with customers to be capitalized, if they meet certain criteria. Capitalized contract costs are subject to amortization and periodic impairment testing. A key part of management’s implementation efforts is the detailed review of the terms and conditions of a sample of revenue contracts covering a broad range of products across geographic locations. This review is complete. The company does not anticipate a significant change in the timing of revenue recognition for management and service fee revenues. Performance fees (including carried interest) are under evaluation; the timing of recognition will be driven by the terms of each performance fee arrangement. Due to the revised criteria related to whether or not the company is acting as a principal or agent, the company expects a change in presentation related to certain costs incurred to fulfill its performance obligations, which are currently presented on a net basis and may be presented as a gross expense under the new guidance. We continue to assess the impact of the rule changes on required disclosures and the accounting for sales commissions and other costs incurred to obtain a contract with a customer. The above findings are based on our work performed to date. Further impacts may be identified as we continue our assessment.

In January 2016, the FASB issued Accounting Standards Update 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities" (ASU 2016-01). The standard amends certain aspects of recognition, measurement, presentation, and disclosure of financial assets and liabilities. One such amendment requires that

9


    

                                    

substantially all equity investments in unconsolidated entities, except those accounted for under the equity method, be measured at fair value with changes recognized in earnings. At September 30, 2017, the company's available-for-sale portfolio of equity investments (seed money) was $74.5 million . Under this guidance, this seed money will be measured at fair value with associated changes in valuation recognized in net income rather than accumulated other comprehensive income. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and, in general, requires a modified retrospective approach to adoption with accumulated gains/losses being reclassified into retained earnings at adoption date.

In March 2016, the FASB issued Accounting Standards Update 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). The standard is intended to simplify aspects of the accounting for share-based payment transactions, including income tax impacts, classification on the statement of cash flows, and forfeitures. The company adopted ASU 2016-09 on January 1, 2017. One of the impacts of the new rules is that excess tax benefits and tax deficiencies related to vested awards are no longer recorded in additional paid-in-capital but rather as an income tax expense or benefit. This provision requires a prospective approach to adoption. In the three and nine months ended September 30, 2017 , the recognition of excess tax benefits reduced our income tax provision by $0.9 million and $3.1 million , respectively.

Another change resulting from the adoption of ASU 2016-09 relates to the presentation of excess tax benefits and tax deficiencies in the Condensed Consolidated Statements of Cash Flows. The standard requires that excess tax benefits and tax deficiencies be shown as operating cash flows within the Condensed Consolidated Statements of Cash Flows; previously, the company reported these cash flow activities as financing cash flows. The company elected to use a prospective approach to adoption related to this provision and in the nine months ended September 30, 2017 , $3.1 million cash inflows were included within the increase/(decrease) in payables as an operating cash flow in the Condensed Consolidated Statements of Cash Flows. ASU 2016-09 requires that employee taxes paid when shares are withheld for tax withholding purposes be reported as a financing activity in the Condensed Consolidated Statements of Cash Flows. The company has retrospectively adopted this change and included $58.6 million in financing activities for the nine months ended September 30, 2017 ( nine months ended September 30, 2016 : $39.7 million ). Additionally, the new rules allow companies to elect to continue to account for forfeitures using an estimate or instead to elect to account for forfeitures as they occur. The company elected to continue to account for forfeitures using an estimate. The company anticipates fluctuations in its effective tax rate as a result of the excess tax benefits or tax deficiencies being recorded to the income tax provision, particularly in the first quarter of each year when annual share awards vest.

In August 2016, the FASB issued Accounting Standards Update 2016-15, "Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments" (ASU 2016-15). The standard addresses eight specific cash flow issues to reduce diversity in practice in how certain cash receipts and cash payments are presented on the Statement of Cash Flows. ASU 2016-15 is effective for fiscal years and interim periods within those years beginning after December 15, 2017. The amendments require a retrospective approach to adoption and early adoption is permitted, including in an interim period. The company continues to evaluate the impact of adopting ASU 2016-15.

In October 2016, the FASB issued Accounting Standards Update 2016-17, “Consolidation: Interests Held through Related Parties That Are under Common Control” (ASU 2016-17). The standard addresses how a reporting entity determines if it satisfies the characteristics of a primary beneficiary of a variable interest entity (VIE) and which party within a group is considered the primary beneficiary. The company adopted ASU 2016-17 on January 1, 2017 and determined that this guidance did not materially change the company's consolidation conclusions.

In February 2017, the FASB issued Accounting Standards Update 2017-05, “Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets: Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets” (ASU 2017-05). The standard clarifies the scope of accounting for gains and losses from the derecognition of nonfinancial assets and adds guidance for partial sales of nonfinancial assets. ASU 2017-05 is effective for fiscal years and interim periods within those years beginning after December 15, 2017 and must be adopted at the same time as ASU 2014-09. The amendments allow either a retrospective or modified retrospective approach to adoption, and early adoption is permitted. The company is currently evaluating the impact of this standard.

In March 2017, the FASB issued Accounting Standard Update 2017-07, “Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (ASU 2017-07). The amendments require that an employer disaggregate the service cost component from the other components of net benefit cost. The amendments also provide guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allow that only the service cost component of net benefit cost is eligible for capitalization. ASU

10


    

                                    

2017-07 is effective for fiscal years and interim periods within those years beginning after December 15, 2017. The amendments require primarily a retrospective approach to adoption. The application of the new rules will result in the reclassification of pension related costs within the Consolidated Statements of Income and no impact to the results of operations.

2 . FAIR VALUE OF ASSETS AND LIABILITIES
The carrying value and fair value of financial instruments are presented in the below summary table. The fair value of financial instruments held by CIP is presented in Note 12 , "Consolidated Investment Products."
 
 
 
September 30, 2017
 
December 31, 2016
$ in millions
Footnote Reference
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Cash and cash equivalents
 
 
1,716.3

 
1,716.3

 
1,328.0

 
1,328.0

Available-for-sale investments
3
 
90.9

 
90.9

 
154.0

 
154.0

Trading investments
3
 
269.9

 
269.9

 
329.6

 
329.6

Foreign time deposits  *
3
 
27.5

 
27.5

 
26.9

 
26.9

Assets held for policyholders
 
 
12,102.6

 
12,102.6

 
8,224.2

 
8,224.2

Policyholder payables *
 
 
(12,102.6
)
 
(12,102.6
)
 
(8,224.2
)
 
(8,224.2
)
Put option contracts

 
1.9

 
1.9

 
21.8

 
21.8

UIT-related financial instruments sold, not yet purchased
 
 
(1.1
)
 
(1.1
)
 
(6.0
)
 
(6.0
)
Contingent consideration liability
 
 
(67.7
)
 
(67.7
)
 
(78.2
)
 
(78.2
)
Long-term debt *
4
 
(2,075.3
)
 
(2,264.5
)
 
(2,102.4
)
 
(2,206.5
)
____________
*
These financial instruments are not measured at fair value on a recurring basis. See the indicated footnotes or most recently filed Form 10-K for additional information about the carrying and fair values of these financial instruments. Foreign time deposits are measured at cost plus accrued interest, which approximates fair value, and are accordingly classified as Level 2 securities.
A three-level valuation hierarchy exists for disclosure of fair value measurements based upon the transparency of inputs into the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
•
Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
•
Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
•
Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.
An asset or liability's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
There are three types of valuation approaches: a market approach, which uses observable prices and other relevant information that is generated by market transactions involving identical or comparable assets or liabilities; an income approach, which uses valuation techniques to convert future amounts to a single, discounted present value amount; and a cost approach, which is based on the amount that currently would be required to replace the service capacity of an asset.
The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy.
Cash equivalents
Cash investments in money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the net asset value (NAV) of the underlying funds, and are classified within level 1 of the valuation hierarchy.

11


    

                                    

Available-for-sale investments
Seed money is valued under the market approach through the use of quoted market prices available in an active market and is classified within level 1 of the valuation hierarchy; there is no modeling or additional information needed to arrive at the fair values of these investments. At September 30, 2017 and December 31, 2016 , investments in collateralized loan obligations (CLOs) were valued using pricing information obtained by an independent third-party pricing source. Other debt securities are valued using a cost valuation technique due to the lack of available cash flow and market data and are accordingly classified within level 3 of the valuation hierarchy.
Trading investments
• Investments related to deferred compensation plans
Investments related to deferred compensation plans are valued under the market approach through the use of quoted prices in an active market and are classified within level 1 of the valuation hierarchy.
• Seed money
Seed money is valued under the market approach through the use of quoted market prices available in an active market and is classified within level 1 of the valuation hierarchy; there is no modeling or additional information needed to arrive at the fair values of these investments.
• Other equity securities
Other equity securities consist of investments in publicly-traded equity securities. These securities are valued under the market approach through the use of quoted prices on an exchange. To the extent these securities are actively traded, valuation adjustments are not applied and they are categorized within level 1 of the valuation hierarchy; otherwise, they are categorized in level 2.
• UIT-related equity and debt securities
The company invests in Unit Investment Trust (UIT)-related equity and debt securities consisting of investments in corporate equities, UITs, and municipal securities. Each is discussed more fully below.
Corporate equities
The company temporarily holds investments in corporate equities for purposes of creating a UIT. Corporate equities are valued under the market approach through use of quoted prices on an exchange. To the extent these securities are actively traded, valuation adjustments are not applied and they are categorized within level 1 of the valuation hierarchy; otherwise, they are categorized in level 2.
UITs
The company may hold units of its sponsored UITs at period-end for sale in the primary market or secondary market. Equity UITs are valued under the market approach through use of quoted prices on an exchange. Fixed income UITs are valued using recently executed transaction prices, market price quotations (where observable), bond spreads, or credit default swap spreads. The spread data used is for the same maturities as the underlying bonds. If the spread data does not reference the issuers, then data that references comparable issuers is used. When observable price quotations are not available, fair value is determined based on cash flow models with yield curves, bond or single name credit default spreads, and recovery rates based on collateral value as key inputs. Depending on the nature of the inputs, these investments are categorized as level 1, 2, or 3.
Put option contracts
The company has purchased put option contracts to hedge economically foreign currency risk on the translation of a portion of its
Pound Sterling-denominated earnings and Euro-denominated earnings into U.S. Dollars (purchases of zero and $8.1 million in the three and nine months ended September 30, 2017 , respectively; three and nine months ended September 30, 2016 $7.5 million and $14.5 million , respectively). These were the only contracts entered into during the period to hedge economically foreign currency risk on the translation of a portion of the Pound Sterling-denominated earnings and provide coverage through December 31, 2018 . The contracts entered into during 2016 to hedge economically foreign currency risk on the translation of a portion of the Euro-denominated earnings provide coverage through December 27, 2017 .

The economic hedge is predominantly triggered upon the impact of a significant decline in the respective Pound Sterling/U.S. Dollar foreign exchange rate or Euro/U.S. Dollar foreign exchange rate. Open put option contracts are marked-to-market through earnings, which are recorded in the company's Condensed Consolidated Statements of Income in other gains and losses, net. These derivative contracts are valued using option valuation models and are included in other assets in the company's Condensed

12


    

                                    

Consolidated Balance Sheets. The significant inputs in these models (volatility, forward points and swap curves) are readily available in public markets or can be derived from observable market transactions for substantially the full terms of the contracts and are classified within level 2 of the valuation hierarchy. The company recognized a net loss of $2.5 million and $19.9 million in the three and nine months ended September 30, 2017 , respectively ( three and nine months ended September 30, 2016 : $0.9 million and $10.0 million net gain, respectively) related to the change in market value of these put option contracts.

Deferred compensation-related total return swap
In addition to holding trading investments, in 2017 the company purchased a total return swap (TRS) to hedge economically certain of these deferred compensation liabilities. The notional value of the total return swap at September 30, 2017 was $106.9 million and its market value was $2.1 million . The market value of the TRS was determined under the market approach using quoted prices of the underlying investments. The TRS is classified as level 2 of the valuation hierarchy. During the three- and nine-month s ended September 30, 2017 , market valuation gains of $3.6 million and $6.1 million , respectively were recognized in other gains and losses, net.

Assets held for policyholders
Assets held for policyholders are measured at fair value under the market approach based on the quoted prices of the underlying funds in an active market and are classified within level 1 of the valuation hierarchy. The policyholder payables are indexed to the value of the assets held for policyholders and are therefore not included in the tables below.
Contingent Consideration Liability
During 2015 , the company acquired certain investment management contracts from Deutsche Bank. Indefinite-lived intangible assets were valued at $119.3 million . This transaction was a non-cash investing activity during that period. The purchase price was comprised solely of contingent consideration payable in future periods, and is linked to future revenues generated from the contracts.  The contingent consideration liability was recorded at fair value as of the date of acquisition using a discounted cash flow model, and is categorized within level 3 of the valuation hierarchy. Anticipated future cash flows were determined using forecasted assets under management (AUM) levels and discounted back to the valuation date. The company reassesses significant unobservable inputs during each reporting period. At September 30, 2017 inputs used in the model included assumed growth rates in AUM ranging from (10.37)% to 29.63% (weighted average growth rate of 8.58% ) and a discount rate of 3.69% . Changes in fair value are recorded in other gains and losses, net in the Condensed Consolidated Statements of Income in the period incurred. An increase in AUM levels and/or a decrease in the discount rate would increase the fair value of the contingent consideration liability, while a decrease in forecasted AUM and/or an increase in the discount rate would decrease the liability.

13


    

                                    

The following table presents, for each of the hierarchy levels described above, the carrying value of the company's assets and liabilities, including major security type for equity and debt securities, which are measured at fair value on the company's Condensed Consolidated Balance Sheet as of September 30, 2017 :
 
As of September 30, 2017
$ in millions
Fair Value Measurements
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
769.0

 
769.0

 
—

 
—

Investments:*
 
 
 
 
 
 
 
Available-for-sale:
 
 
 
 
 
 
 
Seed money
74.5

 
74.5

 
—

 
—

CLOs
6.7

 
—

 
6.7

 
—

Other debt securities
9.7

 
—

 
—

 
9.7

Trading investments:
 
 
 
 
 
 
 
Investments related to deferred compensation plans
89.6

 
89.6

 
—

 
—

Seed money
160.7

 
160.7

 
—

 
—

Other equity securities
17.9

 
17.9

 
—

 
—

UIT-related equity and debt securities:
 
 
 
 
 
 
 
Corporate equities
1.4

 
1.4

 
—

 
—

UITs
0.3

 
0.3

 
—

 
—

Assets held for policyholders
12,102.6

 
12,102.6

 
—

 
—

Put option contracts
1.9

 
—

 
1.9

 
—

Total
13,234.3

 
13,216.0

 
8.6

 
9.7

Liabilities:
 
 
 
 
 
 
 
UIT-related financial instruments sold, not yet purchased:
 
 
 
 
 
 
 
Exchange traded funds
(1.1
)
 
(1.1
)
 
—

 
—

Contingent consideration liability
(67.7
)
 
—

 
—

 
(67.7
)
Total
(68.8
)
 
(1.1
)
 
—

 
(67.7
)
____________
*
Foreign time deposits of $27.5 million are excluded from this table. Equity method and other investments of $296.5 million and $6.1 million , respectively, are also excluded from this table. These investments are not measured at fair value, in accordance with applicable accounting standards.

14


    

                                    

The following table presents, for each of the hierarchy levels described above, the carrying value of the company's assets and liabilities, including major security type for equity and debt securities, which are measured at fair value on the company's Condensed Consolidated Balance Sheet as of December 31, 2016 :
 
As of December 31, 2016
$ in millions
Fair Value Measurements
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
476.2

 
476.2

 
—

 
—

Investments:*
 
 
 
 
 
 
 
Available-for-sale:
 
 
 
 
 
 
 
Seed money
127.9

 
127.9

 
—

 
—

CLOs
12.9

 
—

 
—

 
12.9

Other debt securities
13.2

 
—

 
—

 
13.2

Trading investments:
 
 
 
 
 
 
 
Investments related to deferred compensation plans
170.5

 
170.5

 
—

 
—

Seed Money
121.9

 
121.9

 
—

 
—

Other equity securities
30.4

 
30.4

 
—

 
—

UIT-related equity and debt securities:
 
 
 
 
 
 
 
Corporate equities
1.2

 
1.2

 
—

 
—

UITs
5.6

 
5.6

 
—

 
—

Assets held for policyholders
8,224.2

 
8,224.2

 
—

 
—

Put option contracts
21.8

 
—

 
21.8

 
—

Total
9,205.8

 
9,157.9

 
21.8

 
26.1

Liabilities:
 
 
 
 
 
 
 
UIT-related financial instruments sold, not yet purchased:
 
 
 
 
 
 
 
Exchange traded funds
(5.2
)
 
(5.2
)
 
—

 
—

US treasury securities
(0.8
)
 
(0.8
)
 
—

 
—

Contingent consideration liability
(78.2
)
 
—

 
—

 
(78.2
)
Total
(84.2
)
 
(6.0
)
 
—

 
(78.2
)
____________
*
Foreign time deposits of $26.9 million are excluded from this table. Equity method and other investments of $279.0 million and $5.8 million , respectively, are also excluded from this table. These investments are not measured at fair value, in accordance with applicable accounting standards.

15


    

                                    

The following table shows a reconciliation of the beginning and ending fair value measurements for level 3 assets and liabilities during the three and nine months ended September 30, 2017 and September 30, 2016 , which are valued using significant unobservable inputs:
 
Three months ended September 30, 2017
 
Nine months ended September 30, 2017
$ in millions
Contingent Consideration Liability
 
Other Debt Securities
 
Contingent Consideration Liability
 
CLOs
 
Other Debt Securities
Beginning balance
(69.2
)
 
9.8

 
(78.2
)
 
12.9

 
13.2

Purchases/acquisitions
—

 
—

 
—

 
—

 
7.3

Net unrealized gains and losses included in other gains and losses, net*
(1.6
)
 
—

 
0.2

 
—

 
(2.2
)
Disposition/settlements
3.1

 
(0.1
)
 
10.3

 
—

 
(8.6
)
Transfer from level 3 to level 2
—

 
—

 
—

 
(12.9
)
 
—

Ending balance
(67.7
)
 
9.7

 
(67.7
)
 
—

 
9.7


 
Three months ended September, 2016
 
Nine months ended September 30, 2016
$ in millions
Contingent Consideration Liability
 
CLOs
 
Other Debt Securities
 
Contingent Consideration Liability
 
CLOs
 
Other Debt Securities
Beginning balance
(89.3
)
 
11.5

 
3.3

 
(83.9
)
 
1.4

 
5.9

Adjustment for adoption of ASU 2015-02
—

 
—

 
—

 
—

 
11.5

 
—

Beginning balance, as adjusted
(89.3
)
 
11.5

 
3.3

 
(83.9
)
 
12.9

 
5.9

Returns of capital
—

 
(0.9
)
 
—

 
—

 
(2.3
)
 
(2.6
)
Net unrealized gains and losses included in other gains and losses, net*
5.3

 
—

 
—

 
(6.3
)
 
—

 
—

Net unrealized gains and losses included in accumulated other comprehensive income/(loss) *
—

 
1.4

 
—

 
—

 
1.4

 
—

Disposition/settlements
3.3

 
—

 
—

 
9.5

 
—

 
—

Ending balance
(80.7
)
 
12.0

 
3.3

 
(80.7
)
 
12.0

 
3.3

_______________
*
These unrealized gains and losses are attributable to balances still held at the respective period ends.
3 .   INVESTMENTS
The disclosures below include details of the company's investments. Investments held by CIP are detailed in Note 12 , "Consolidated Investment Products."
$ in millions
September 30, 2017
 
December 31, 2016
Available-for-sale investments:
 
 
 
Seed money
74.5

 
127.9

CLOs
6.7

 
12.9

Other debt securities
9.7

 
13.2

Trading investments:
 
 
 
Investments related to deferred compensation plans
89.6

 
170.5

Seed money
160.7

 
121.9

Other equity securities
17.9

 
30.4

     UIT-related equity and debt securities
1.7

 
6.8

Equity method investments
296.5

 
279.0

Foreign time deposits
27.5

 
26.9

Other
6.1

 
5.8

Total investments
690.9

 
795.3


16


    

                                    

Available for sale investments
Realized gains and losses recognized in the Condensed Consolidated Statements of Income during the period from investments classified as available-for-sale are as follows:
 
For the three months ended September 30, 2017
 
For the nine months ended September 30, 2017
$ in millions
Proceeds from Sales
 
Gross Realized Gains
 
Gross Realized Losses
 
Proceeds from Sales
 
Gross Realized Gains
 
Gross Realized Losses
Seed money
15.2

 
1.6

 
—

 
61.7

 
2.7

 
(1.5
)
CLOs
3.5

 
0.8

 
—

 
6.1

 
1.2

 
—

Other debt securities
0.1

 
0.2

 
—

 
8.6

 
1.0

 
—

 
18.8

 
2.6

 
—

 
76.4

 
4.9

 
(1.5
)
 
For the three months ended September 30, 2016
 
For the nine months ended September 30, 2016
$ in millions
Proceeds from Sales
 
Gross Realized Gains
 
Gross Realized Losses
 
Proceeds from Sales
 
Gross Realized Gains
 
Gross Realized Losses
Seed money
31.7

 
0.8

 
(0.7
)
 
33.5

 
1.2

 
(0.7
)
CLOs
1.0

 
—

 
—

 
2.3

 
—

 
—

Other debt securities
—

 
—

 
—

 
2.6

 
—

 
—

 
32.7

 
0.8

 
(0.7
)
 
38.4

 
1.2

 
(0.7
)
Upon the sale of available-for-sale securities, net realized gains of $2.6 million and $3.4 million were transferred from accumulated other comprehensive income/(loss) into the Condensed Consolidated Statements of Income during the three and nine months ended September 30, 2017 , respectively ( three and nine months ended September 30, 2016 : $0.1 million and $0.5 million , respectively). The specific identification method is used to determine the realized gain or loss on securities sold or otherwise disposed.

Gross unrealized holding gains and losses recognized in other accumulated other comprehensive income/(loss) from available-for-sale investments are presented in the table below:
 
September 30, 2017
 
December 31, 2016
$ in millions
Cost
 
Gross Unrealized Holding Gains
 
Gross Unrealized Holding Losses
 
Fair Value
 
Cost
 
Gross Unrealized Holding Gains
 
Gross Unrealized Holding Losses
 
Fair Value
Seed money
68.0

 
7.5

 
(1.0
)
 
74.5

 
127.2

 
6.8

 
(6.1
)
 
127.9

CLOs
5.2

 
1.5

 
—

 
6.7

 
9.2

 
3.7

 
—

 
12.9

Other debt securities
9.7

 
—

 
—

 
9.7

 
13.2

 
—

 
—

 
13.2

 
82.9

 
9.0

 
(1.0
)
 
90.9

 
149.6

 
10.5

 
(6.1
)
 
154.0

At September 30, 2017 , 48 seed money funds ( December 31, 2016 : 103 seed money funds) had incurred gross unrealized holding losses. The following table provides a breakdown of the unrealized losses.
 
September 30, 2017
 
December 31, 2016
$ in millions
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
Less than 12 months
0.1

 
—

 
1.9

 
(0.2
)
12 months or greater
38.4

 
(1.0
)
 
56.4

 
(5.9
)
Total
38.5

 
(1.0
)
 
58.3

 
(6.1
)
The company has reviewed investment securities for other-than-temporary impairment (OTTI) in accordance with its accounting policy and has recognized $3.2 million of other-than-temporary impairment charges on available-for-sale investments during the nine months ended September 30, 2017 ( nine months ended September 30, 2016 : none ). In contemplation of OTTI, the company conducts a review of the financial condition and near-term prospects of the underlying securities as well as the severity and duration of any declines in fair value. No OTTI is recorded for seeded funds which are expected to recover their value over time and for which the company has the intent and ability to hold the securities until this

17


    

                                    

recovery occurs. For CLO investments, the company reviewed the estimated future cashflows of each CLO. If the present value of the estimated future cashflows is lower than the carrying value of the investment and there is an adverse change in estimated cashflows, the impairment is considered to be other than temporary. During the nine months ended September 30, 2017 and 2016 , no other-than-temporary impairment related to credit related factors was recognized.
Available-for-sale debt securities as of September 30, 2017 by maturity, are set out below:
 
Available-for-Sale (Fair Value)
Less than one year
9.7

One to five years
0.2

Five to ten years
6.5

Greater than ten years
—

Total available-for-sale
16.4


Trading investments
The portion of trading gains and losses for the three and nine months ended September 30, 2017 , that relates to trading securities still held at September 30, 2017 , was a $3.9 million net gain and $14.1 million net gain , respectively ( three and nine months ended September 30, 2016 : $11.3 million net gain and $12.9 million net gain , respectively).

4 .  LONG-TERM DEBT
The disclosures below include details of the company's debt. Debt of CIP is detailed in Note 12 , “Consolidated Investment Products.”
 
September 30, 2017
 
December 31, 2016
$ in millions
Carrying Value**
 
Fair Value
 
Carrying Value**
 
Fair Value
  Floating rate credit facility expiring August 11, 2022
—

 
—

 
28.7

 
28.7

Unsecured Senior Notes*:
 
 
 
 
 
 
 
$600 million 3.125% - due November 30, 2022
596.8

 
615.6

 
596.3

 
604.7

$600 million 4.000% - due January 30, 2024
593.8

 
636.4

 
593.2

 
625.3

$500 million 3.750% - due January 15, 2026
494.9

 
524.6

 
494.5

 
506.4

$400 million 5.375% - due November 30, 2043
389.8

 
487.9

 
389.7

 
441.4

Long-term debt
2,075.3

 
2,264.5

 
2,102.4

 
2,206.5

____________
*
The company's senior note indentures contain certain restrictions on mergers or consolidations. Beyond these items, there are no other restrictive covenants in the indentures.
**
The difference between the principal amounts and the carrying values of the senior notes in the table above reflect the unamortized debt issuance costs and discounts.

The issuer of the senior notes is an indirect 100% owned finance subsidiary of the Parent, and the Parent fully and unconditionally guarantees the securities. The requirement of certain subsidiaries of the Parent to maintain minimum levels of capital and other similar provisions of applicable law may have the effect of limiting withdrawals of capital, repayment of intercompany loans and payment of dividends by such entities.
The fair market value of the company's senior notes was determined by market quotes provided by Bloomberg, which is considered a level 2 valuation input. In the absence of an active market, the company relies upon the average price quoted by brokers for determining the fair market value of the debt.
At September 30, 2017 , the company's outstanding senior notes of $2,075.3 million mature in periods greater than five years from the balance sheet date. The floating rate credit facility will expire in less than five years .

18


    

                                    

During the quarter the company amended and restated the credit facility agreement increasing the borrowing limit to $1.5 billion and extending the expiration date to August 11, 2022. At September 30, 2017 , the outstanding balance on the $1.5 billion credit facility was zero ( December 31, 2016 : $28.7 million ). The credit facility will bear interest at (i) LIBOR for specified borrowing periods or (ii) a floating base rate (based upon the highest of (a) the Bank of America prime rate, (b) the Federal Funds rate plus 0.50% and (c) LIBOR for an interest period of one month plus 1.00% ), plus, in either case, an applicable incremental margin determined with reference to the higher of the available credit ratings of the company or its indirect subsidiary Invesco Finance PLC. Based on credit ratings as of September 30, 2017 of the company, the applicable incremental margin for LIBOR-based loans was 1.00% and for base rate loans was 0.00% . In addition, the company is required to pay the lenders a facility fee on the unused commitments of the lenders at a rate per annum which is based on the higher of the available credit ratings of the company or its indirect subsidiary Invesco Finance PLC. Based on credit ratings as of September 30, 2017 , the annual facility fee was equal to 0.125% .
The credit agreement governing the credit facility contains customary restrictive covenants on the company and its subsidiaries. Restrictive covenants in the credit agreement include, but are not limited to: prohibitions on creating, incurring or assuming any liens; entering into merger arrangements; selling, leasing, transferring or otherwise disposing of assets; making a material change in the nature of the business; making a significant accounting policy change in certain situations; entering into transactions with affiliates; and incurring indebtedness through the subsidiaries (other than the borrower, Invesco Finance PLC). Many of these restrictions are subject to certain minimum thresholds and exceptions. Financial covenants under the credit agreement include: (i) the quarterly maintenance of a debt/EBITDA leverage ratio, as defined in the credit agreement, of not greater than 3.25 :1.00, (ii) a coverage ratio (EBITDA, as defined in the credit agreement/interest payable for the four consecutive fiscal quarters ended before the date of determination) of not less than 4.00 :1.00.
The credit agreement governing the credit facility also contains customary provisions regarding events of default which could result in an acceleration or increase in amounts due, including (subject to certain materiality thresholds and grace periods) payment default, failure to comply with covenants, material inaccuracy of representation or warranty, bankruptcy or insolvency proceedings, change of control, certain judgments, ERISA matters, cross-default to other debt agreements, governmental action prohibiting or restricting the company or its subsidiaries in a manner that has a material adverse effect and failure of certain guaranty obligations. The company is in compliance with all regulatory minimum net capital requirements.
The lenders (and their respective affiliates) may have provided, and may in the future provide, investment banking, cash management, underwriting, lending, commercial banking, leasing, foreign exchange, trust or other advisory services to the company and its subsidiaries and affiliates. These parties may have received, and may in the future receive, customary compensation for these services.
The company maintains approximately $10.6 million in letters of credit from a variety of banks. The letters of credit are generally one -year automatically-renewable facilities and are maintained for various commercial reasons.
5 .   SHARE CAPITAL
The number of common shares and common share equivalents issued are represented in the table below:
 
As of
In millions
September 30, 2017
 
December 31, 2016

Common shares issued
490.4

 
490.4

Less: Treasury shares for which dividend and voting rights do not apply
(83.3
)
 
(86.6
)
Common shares outstanding
407.1

 
403.8

Total treasury shares at September 30, 2017 were 92.5 million ( December 31, 2016 : 95.9 million ), including 9.2 million unvested restricted stock awards ( December 31, 2016 : 9.3 million ) for which dividend and voting rights apply. The market price of common shares at September 30, 2017 was $35.04 per share. The total market value of the company's 92.5 million treasury shares was $3.2 billion at September 30, 2017 .


19


    

                                    

6 .   OTHER COMPREHENSIVE INCOME/(LOSS)
The components of accumulated other comprehensive income/(loss) were as follows:
 
For the three months ended September 30, 2017
$ in millions
Foreign currency translation
 
Employee benefit plans
 
Equity method investments
 
Available-for-sale investments
 
Total
Other comprehensive income/(loss) net of tax:
 
 
 
 
 
 
 
 
 
Currency translation differences on investments in foreign subsidiaries
142.4

 
—

 
—

 
—

 
142.4

Reclassification of actuarial (gain)/loss into employee compensation expense
—

 
5.3

 
—

 
—

 
5.3

Share of other comprehensive income/(loss) of equity method investments
—

 
—

 
(0.1
)
 
—

 
(0.1
)
Unrealized gains/(losses) on available-for-sale investments, net of tax
—

 
—

 
—

 
(0.2
)
 
(0.2
)
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net
—

 
—

 
—

 
(1.7
)
 
(1.7
)
Other comprehensive income/(loss), net of tax
142.4

 
5.3

 
(0.1
)
 
(1.9
)
 
145.7

 
 
 
 
 
 
 
 
 
 
Beginning balance
(469.9
)
 
(138.5
)
 
6.0

 
8.2

 
(594.2
)
Other comprehensive income/(loss), net of tax
142.4

 
5.3

 
(0.1
)
 
(1.9
)
 
145.7

Ending balance
(327.5
)
 
(133.2
)
 
5.9

 
6.3

 
(448.5
)

 
For the nine months ended September 30, 2017
$ in millions
Foreign currency translation
 
Employee benefit plans
 
Equity method investments
 
Available-for-sale investments
 
Total
Other comprehensive income/(loss) net of tax:
 
 
 
 
 
 
 
 
 
Currency translation differences on investments in foreign subsidiaries
352.4

 
—

 
—

 
—

 
352.4

Actuarial (loss)/gain related to employee benefit plans, net of tax
—

 
(0.4
)
 
—

 
—

 
(0.4
)
Reclassification of actuarial (gain)/loss into employee compensation expense
—

 
6.4

 
—

 
—

 
6.4

Share of other comprehensive income/(loss) of equity method investments
—

 
—

 
1.1

 
—

 
1.1

Unrealized gains/(losses) on available-for-sale investments
—

 
—

 
—

 
3.8

 
3.8

Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net
—

 
—

 
—

 
(2.5
)
 
(2.5
)
Other comprehensive income/(loss), net of tax
352.4

 
6.0

 
1.1

 
1.3

 
360.8

 
 
 
 
 
 
 
 
 
 
Beginning balance
(679.9
)
 
(139.2
)
 
4.8

 
5.0

 
(809.3
)
Other comprehensive income/(loss), net of tax
352.4

 
6.0

 
1.1

 
1.3

 
360.8

Ending balance
(327.5
)
 
(133.2
)
 
5.9

 
6.3

 
(448.5
)






20


    

                                    

 
For the three months ended September 30, 2016
$ in millions
Foreign currency translation
 
Employee benefit plans
 
Equity method investments
 
Available-for-sale investments
 
Total
Other comprehensive income/(loss) net of tax:
 
 
 
 
 
 
 
 
 
Currency translation differences on investments in foreign subsidiaries
(63.4
)
 
—

 
—

 
—

 
(63.4
)
Reclassification of prior service cost/(credit) into employee compensation expense
—

 
(1.8
)
 
—

 
—

 
(1.8
)
Reclassification of actuarial (gain)/loss into employee compensation expense
—

 
0.4

 
—

 
—

 
0.4

Share of other comprehensive income/(loss) of equity method investments
—

 
—

 
2.4

 
—

 
2.4

Unrealized gains/(losses) on available-for-sale investments
—

 
—

 
—

 
2.3

 
2.3

Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net
—

 
—

 
—

 
(0.2
)
 
(0.2
)
Other comprehensive income/(loss)
(63.4
)
 
(1.4
)
 
2.4

 
2.1

 
(60.3
)
 
 
 
 
 
 
 
 
 
 
Beginning balance
(432.7
)
 
(88.6
)
 
6.5

 
0.9

 
(513.9
)
Other comprehensive income/(loss)
(63.4
)
 
(1.4
)
 
2.4

 
2.1

 
(60.3
)
Other comprehensive (income)/loss attributable to noncontrolling interests
0.5

 
—

 
—

 
—

 
0.5

Ending balance
(495.6
)
 
(90.0
)
 
8.9

 
3.0

 
(573.7
)

 
For the nine months ended September 30, 2016
$ in millions
Foreign currency translation
 
Employee benefit plans
 
Equity method investments
 
Available-for-sale investments
 
Total
Other comprehensive income/(loss) net of tax:
 
 
 
 
 
 
 
 
 
Currency translation differences on investments in foreign subsidiaries
(132.8
)
 
—

 
—

 
—

 
(132.8
)
Actuarial (loss)/gain related to employee benefit plans
—

 
(0.4
)
 
—

 
—

 
(0.4
)
Reclassification of prior service cost/(credit) into employee compensation expense
—

 
(5.2
)
 
—

 
—

 
(5.2
)
Reclassification of actuarial (gain)/loss into employee compensation expense
—

 
1.2

 
—

 
—

 
1.2

Share of other comprehensive income/(loss) of equity method investments
—

 
—

 
3.0

 
—

 
3.0

Unrealized gains/(losses) on available-for-sale investments
—

 
—

 
—

 
4.0

 
4.0

Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net
—

 
—

 
—

 
(0.5
)
 
(0.5
)
Other comprehensive income/(loss)
(132.8
)
 
(4.4
)
 
3.0

 
3.5

 
(130.7
)
 
 
 
 
 
 
 
 
 
 
Beginning balance
(365.8
)
 
(85.6
)
 
5.9

 
(0.5
)
 
(446.0
)
Other comprehensive income/(loss)
(132.8
)
 
(4.4
)
 
3.0

 
3.5

 
(130.7
)
Other comprehensive (income)/loss attributable to noncontrolling interests
3.0

 
—

 
—

 
—

 
3.0

Ending balance
(495.6
)
 
(90.0
)
 
8.9

 
3.0

 
(573.7
)

Net Investment Hedge

During the second quarter of 2016, the Company designated certain intercompany debt as a non-derivative net investment hedging instrument against foreign currency exposure related to its net investment in foreign operations. At September 30, 2017 , £130.0 million ( $174.4 million ) of intercompany debt was designated as a net investment hedge.  For the nine months ended September 30, 2017 , the Company recognized foreign currency losses of $13.8 million resulting from the net investment hedge within currency translation differences on investments in foreign subsidiaries in other comprehensive income. No hedge ineffectiveness was recognized in income.

21


    

                                    


7 .   SHARE-BASED COMPENSATION
The company recognized total expenses of $134.9 million and $118.4 million related to equity-settled share-based payment transactions in the nine months ended September 30, 2017 and 2016 , respectively.
Share Awards
Movements on share awards during the periods ended September 30 , are detailed below:
 
For the nine months ended September 30, 2017
 
For the nine months ended September 30, 2016
Millions of shares, except fair values
Time- Vested
 
Performance- Vested
 
Weighted Average Grant Date Fair Value ($)
 
Time- Vested
 
Performance- Vested
Unvested at the beginning of period
12.1

 
0.8

 
31.22

 
10.4

 
0.6

Granted during the period
5.3

 
0.3

 
32.21

 
6.4

 
0.4

Forfeited during the period
(0.4
)
 
—

 
31.50

 
(0.2
)
 
—

Vested and distributed during the period
(4.8
)
 
(0.2
)
 
31.37

 
(4.2
)
 
(0.2
)
Unvested at the end of the period
12.2

 
0.9

 
31.57

 
12.4

 
0.8


The total fair value of shares that vested during the nine months ended September 30, 2017 was $158.0 million ( nine months ended September 30, 2016 : $120.4 million ). The weighted average grant date fair value of the share awards that were granted during the nine months ended September 30, 2017 was $32.21 ( nine months ended September 30, 2016 : $27.40 ).
At September 30, 2017 , there was $301.8 million of total unrecognized compensation cost related to non-vested share awards; that cost is expected to be recognized over a weighted average period of 2.56 years .

8 .   RETIREMENT BENEFIT PLANS
Defined Contribution Plans
The total amounts charged to the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2017 of $15.0 million and $47.8 million , respectively ( three and nine months ended September 30, 2016 : $13.9 million and $44.3 million , respectively) represent contributions paid or payable to the defined contribution plans by the company at rates specified in the rules of the plans. As of September 30, 2017 , accrued contributions of $22.5 million ( December 31, 2016 : $23.1 million ) for the current year will be paid to the plans.
Defined Benefit Plans
The company maintains legacy defined benefit pension plans for qualifying employees of its subsidiaries in the U.K., Ireland, Germany and Taiwan. During the three months ended September 30, 2017, the U.K. defined benefit plan experienced a partial settlement. The postretirement medical plan was terminated effective December 31, 2016. The components of net periodic benefit cost in respect of these defined benefit plans are as follows:
 
For the three months ended September 30,
 
For the nine months ended September 30,
$ in millions
2017
 
2016
 
2017
 
2016
Service cost
1.2

 
1.4

 
3.6

 
4.2

Interest cost
4.1

 
4.4

 
12.3

 
13.2

Expected return on plan assets
(5.4
)
 
(5.7
)
 
(16.2
)
 
(17.1
)
Settlement related to employee benefit plan
5.5

 
—

 
5.5

 
—

Amortization of net actuarial (gain)/loss
0.8

 
0.4

 
2.1

 
1.4

Net periodic benefit cost/(benefit)
6.2

 
0.5

 
7.3

 
1.7


22


    

                                    

The estimated contributions expected to be paid to the plans during 2017 are $11.2 million . Payments made to the plans during the nine months ended September 30, 2017 were $8.4 million .
9 .   TAXATION
At September 30, 2017 , the total amount of gross unrecognized tax benefits was $21.2 million as compared to the December 31, 2016 total of $10.5 million . In the three months ended September 30, 2017 , a liability of $11.0 million was recorded as a result of an uncertain tax position arising from Illinois tax regulation changes enacted in the quarter.
10 .   EARNINGS PER SHARE
The calculation of earnings per share is as follows:
 
For the three months ended September 30,
 
For the nine months ended September 30,
In millions, except per share data
2017
 
2016
 
2017
 
2016
Net income

$274.6

 

$255.9

 

$738.4

 

$650.2

Net (income)/loss attributable to noncontrolling interests in consolidated entities
(7.1
)
 
(14.7
)
 
(19.3
)
 
(22.5
)
Net income attributable to Invesco Ltd.
267.5

 
241.2

 
719.1

 
627.7

Less: Allocation of earnings to restricted shares
(8.0
)
 
(7.3
)
 
(21.6
)
 
(18.1
)
Net income attributable to common shareholders

$259.5

 

$233.9

 

$697.5

 

$609.6

 
 
 
 
 
 
 
 
Invesco Ltd:
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
410.0

 
412.6

 
409.2

 
416.7

Dilutive effect of non-participating share-based awards
0.5

 
0.3

 
0.4

 
0.3

Weighted average shares outstanding - diluted
410.5

 
412.9

 
409.6

 
417.0

 
 
 
 
 
 
 
 
Common shareholders:
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
410.0

 
412.6

 
409.2

 
416.7

Less: Weighted average restricted shares
(12.2
)
 
(12.4
)
 
(12.3
)
 
(12.0
)
Weighted average common shares outstanding - basic
397.8

 
400.2

 
396.9

 
404.7

Dilutive effect of non-participating share-based awards
0.5

 
0.3

 
0.4

 
0.3

Weighted average common shares outstanding - diluted
398.3

 
400.5

 
397.3

 
405.0

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic earnings per share

$0.65

 

$0.58

 

$1.76

 

$1.51

Diluted earnings per share

$0.65

 

$0.58

 

$1.76

 

$1.51

See Note 7 , “Share-Based Compensation,” for a summary of share awards outstanding under the company's share-based compensation programs. These programs could result in the issuance of common shares from time to time that would affect the measurement of basic and diluted earnings per share.
There were no performance-vested or time-vested awards excluded from the computation of diluted earnings per share during the three and nine months ended September 30 , 2017 due to their inclusion being anti-dilutive ( three and nine months ended September 30, 2016 : none ). There were 0.1 million contingently issuable shares excluded from the diluted earnings per share computation during the three and nine months ended September 30, 2017 ( three and nine months ended September 30, 2016 : 0.2 million ), because the necessary performance conditions for the shares to be issuable had not yet been satisfied at the end of the respective period.

23


    

                                    

11 .   COMMITMENTS AND CONTINGENCIES
Commitments and contingencies may arise in the ordinary course of business.
Off Balance Sheet Commitments
The company has transactions with various private equity, real estate and other investment entities sponsored by the company for the investment of client assets in the normal course of business. Many of the company's investment products are structured as limited partnerships. The company's investment may take the form of the general partner or a limited partner. The entities are structured such that each partner makes capital commitments that are to be drawn down over the life of the partnership as investment opportunities are identified. At September 30, 2017 , the company's undrawn capital commitments were $291.2 million ( December 31, 2016 : $204.1 million ).
The Parent and various company subsidiaries have entered into agreements with financial institutions to guarantee certain obligations of other company subsidiaries. The company would be required to perform under these guarantees in the event of certain defaults. The company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
Legal Contingencies
The company is from time to time involved in litigation relating to claims arising in the ordinary course of its business. The nature and progression of litigation can make it difficult to predict the impact a particular lawsuit will have on the company. There are many reasons that the company cannot make these assessments, including, among others, one or more of the following: the proceeding is in its early stages; the damages sought are unspecified, unsupportable, unexplained or uncertain; the claimant is seeking relief other than compensatory damages; the matter presents novel legal claims or other meaningful legal uncertainties; discovery has not started or is not complete; there are significant facts in dispute; and there are other parties who may share in any ultimate liability.
In management’s opinion, adequate accrual has been made as of September 30, 2017 to provide for any such losses that may arise from matters for which the company could reasonably estimate an amount. Management is of the opinion that the ultimate resolution of such claims will not materially affect the company’s business, financial position, results of operation or liquidity. Furthermore, in management’s opinion, it is not possible to estimate a range of reasonably possible losses with respect to other litigation contingencies.
The investment management industry also is subject to extensive levels of ongoing regulatory oversight and examination. In the United States, United Kingdom, and other jurisdictions in which the company operates, governmental authorities regularly make inquiries, hold investigations and administer market conduct examinations with respect to the company's compliance with applicable laws and regulations. Additional lawsuits or regulatory enforcement actions arising out of these inquiries may in the future be filed against the company and related entities and individuals in the United States, United Kingdom, and other jurisdictions in which the company and its affiliates operate. Any material loss of investor and/or client confidence as a result of such inquiries and/or litigation could result in a significant decline in AUM, which would have an adverse effect on the company’s future financial results and its ability to grow its business.
In a separate matter, a Canadian subsidiary of the company had previously received assessments related to prior taxation periods up to and including the year ended December 31, 2012 for goods and services tax that the Canada Revenue Agency (CRA) believes should be levied on certain fees payable. The assessments, including applicable interest, are approximately $ 7.8 million . The company has secured a letter of credit in the same amount, which has been posted with the CRA as security for payment. The company objected to and appealed the assessments, and in May 2017, the Tax Court of Canada ruled in favor of the CRA. The company filed an appeal with the Federal Court of Appeal in June 2017. Management, with advice from advisors and counsel, believes it is more likely than not that its position will prevail upon appeal, and accordingly no provision has been recorded in the Condensed Consolidated Financial Statements.


24


    

                                    

12 .   CONSOLIDATED INVESTMENT PRODUCTS
The following table presents the balances related to CIP that are included on the Condensed Consolidated Balance Sheets as well as Invesco's net interest in the CIP for each period presented. At September 30, 2017 all CIP are VIEs.
 
As of
$ in millions
September 30, 2017
 
December 31, 2016
Cash and cash equivalents of CIP
485.9

 
742.2

Accounts receivable and other assets of CIP
69.1

 
106.2

Investments of CIP
5,124.3

 
5,116.1

Less: Debt of CIP
(4,323.6
)
 
(4,403.1
)
Less: Other liabilities of CIP
(339.9
)
 
(673.4
)
Less: Retained earnings
17.5

 
19.0

Less: Accumulated other comprehensive income, net of tax
(17.4
)
 
(18.0
)
Less: Equity attributable to redeemable noncontrolling interests
(309.6
)
 
(283.7
)
Less: Equity attributable to nonredeemable noncontrolling interests
(233.9
)
 
(107.2
)
Invesco's net interests in CIP
472.4

 
498.1

The following tables reflect the impact of consolidation of investment products into the Condensed Consolidated Statements of Income for the three and nine months ended September 30 , 2017 and 2016 :
 
Three months ended September 30,
$ in millions
2017
 
2016
Total operating revenues
(6.2
)
 
(5.7
)
Total operating expenses
4.2

 
7.4

Operating income
(10.4
)
 
(13.1
)
Equity in earnings of unconsolidated affiliates
(5.7
)
 
(5.2
)
Interest and dividend income
—

 
—

Other gains and losses, net
(9.8
)
 
(2.8
)
Interest and dividend income of CIP
52.7

 
50.1

Interest expense of CIP
(36.3
)
 
(28.8
)
Other gains/(losses) of CIP, net
15.3

 
17.7

Income before income taxes
5.8

 
17.9

Income tax provision
—

 
—

Net income
5.8

 
17.9

Net (income)/loss attributable to noncontrolling interests in consolidated entities
(7.1
)
 
(14.7
)
Net income attributable to Invesco Ltd.
(1.3
)
 
3.2



25


    

                                    

 
Nine months ended September 30,
$ in millions
2017
 
2016
Total operating revenues
(25.7
)
 
(16.3
)
Total operating expenses
5.2

 
17.1

Operating income
(30.9
)
 
(33.4
)
Equity in earnings of unconsolidated affiliates
(8.4
)
 
(6.8
)
Interest and dividend income
—

 
(0.2
)
Other gains and losses, net
(32.4
)
 
(3.7
)
Interest and dividend income of CIP
156.4

 
140.7

Interest expense of CIP
(117.3
)
 
(89.4
)
Other gains/(losses) of CIP, net
53.4

 
18.1

Income before income taxes
20.8

 
25.3

Income tax provision
—

 
—

Net income
20.8

 
25.3

Net (income)/loss attributable to noncontrolling interests in consolidated entities
(19.3
)
 
(22.5
)
Net income attributable to Invesco Ltd.
1.5

 
2.8

The company's risk with respect to each investment in CIP is limited to its equity ownership and any uncollected management and performance fees. The company has no right to the benefits from, nor does it bear the risks associated with, these investments, beyond the company's direct investments in, and management and performance fees generated from, the investment products. If the company were to liquidate, these investments would not be available to the general creditors of the company, and as a result, the company does not consider investments held by CIP to be company assets. Additionally, the collateral assets of consolidated CLOs are held solely to satisfy the obligations of the CLOs, and the investors in the consolidated CLOs have no recourse to the general credit of the company for the notes issued by the CLOs. CIP are taxed at the investor level and not at the product level; therefore, there is no tax provision reflected in the net impact of CIP.
Non-consolidated VIEs
At September 30, 2017 , the company's carrying value and maximum risk of loss with respect to VIEs in which the company is not the primary beneficiary was $232.3 million ( December 31, 2016 : $234.4 million ).

26


    

                                    

Balance Sheet information - newly consolidated VIEs/VOEs
During the nine months ended September 30, 2017 , the company consolidated fifteen new VIEs ( September 30, 2016 : the company consolidated five new VIEs.) The table below illustrates the summary balance sheet amounts related to these products before consolidation into the company. The balances below are reflective of the balances existing at the consolidation date after the initial funding of the investments by the company and unrelated third-party investors. The current period activity for the consolidated funds, including the initial funding and subsequent investment of initial cash balances into underlying investments of CIP, is reflected in the company’s Condensed Consolidated Financial Statements.
 
For the nine months ended September 30, 2017
 
For the nine months ended September 30, 2016
$ in millions
VIEs
 
VIEs
Cash and cash equivalents of CIP
14.9

 
151.0

Accounts receivable and other assets of CIP
8.5

 
3.6

Investments of CIP
331.9

 
311.0

Total assets
355.3

 
465.6

 
 
 
 
Debt of CIP
15.1

 
414.4

Other liabilities of CIP
105.1

 
17.4

Total liabilities
120.2

 
431.8

Total equity
235.1

 
33.8

Total liabilities and equity
355.3

 
465.6

During the nine months ended September 30, 2017 , the company determined that it was no longer the primary beneficiary of six VIEs and one voting rights entity (VOE) ( September 30, 2016 : the company determined that it was no longer the primary beneficiary of four VIEs). The amounts deconsolidated from the Condensed Consolidated Balance Sheets are illustrated in the table below. There was no net impact to the Condensed Consolidated Statements of Income for the nine months ended September 30, 2017 and 2016 from the deconsolidation of these investment products.
 
For the nine months ended September 30, 2017
 
For the nine months ended September 30, 2016
$ in millions
VIEs
 
VOEs
 
VIEs
Cash and cash equivalents of CIP
15.7

 
—

 
23.6

Accounts receivable and other assets of CIP
4.1

 
0.2

 
12.2

Investments of CIP
242.9

 
49.8

 
196.1

Total assets
262.7

 
50.0

 
231.9

 
 
 
 
 
 
Debt of CIP
4.2

 
—

 
—

Other liabilities of CIP
3.1

 
—

 
13.1

Total liabilities
7.3

 
—

 
13.1

Total equity
255.4

 
50.0

 
218.8

Total liabilities and equity
262.7

 
50.0

 
231.9


27


    

                                    

The following tables present the fair value hierarchy levels of certain CIP balances which are measured at fair value as of September 30, 2017 and December 31, 2016 :
 
As of September 30, 2017
$ in millions
Fair Value Measurements
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Investments Measured at NAV as a practical expedient
Assets:
 
 
 
 
 
 
 
 
 
Bank loans
4,332.4

 
—

 
4,332.4

 
—

 
—

Bonds
253.4

 
—

 
253.4

 
—

 
—

Equity securities
187.8

 
184.8

 
3.0

 
—

 
—

Equity and fixed income mutual funds
131.7

 
131.7

 
—

 
—

 
—

Investments in other private equity funds
155.5

 
—

 
—

 
—

 
155.5

  Real estate investments
63.5

 
—

 
—

 
63.5

 
—

Total assets at fair value
5,124.3

 
316.5

 
4,588.8

 
63.5

 
155.5

 
As of December 31, 2016
$ in millions
Fair Value Measurements
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Investments Measured at NAV as a practical expedient
Assets:
 
 
 
 
 
 
 
 
 
Bank loans
4,397.8

 
—

 
4,397.8

 
—

 
—

Bonds
370.9

 
—

 
370.9

 
—

 
—

Equity securities
167.4

 
166.0

 
1.4

 
—

 
—

Equity and fixed income mutual funds
13.0

 
13.0

 
—

 
—

 
—

Investments in other private equity funds
68.6

 
—

 
—

 


 
68.6

Real estate investments
40.7

 
—

 
—

 
40.7

 
—

Investments in fixed income fund of funds
57.7

 
—

 
—

 
—

 
57.7

Total assets at fair value
5,116.1

 
179.0

 
4,770.1

 
40.7

 
126.3


28


    

                                    

The following tables show a reconciliation of the beginning and ending fair value measurements for level 3 assets and liabilities using significant unobservable inputs:
 
Three months ended September 30, 2017
 
Nine months ended September 30, 2017
$ in millions
Level 3 Assets
 
Level 3 Assets
Beginning balance
59.9

 
40.7

Purchases
—

 
15.1

Sales
—

 
(5.1
)
Gains and losses included in the Condensed Consolidated Statements of Income*
3.6

 
12.8

Ending balance
63.5

 
63.5


 
Three months ended September 30, 2016
 
Nine months ended September 30, 2016
$ in millions
Level 3 Assets
 
Level 3 Assets
Beginning balance
23.9

 
388.6

Adjustment for adoption of ASU 2015-02
—

 
(388.6
)
Purchases
—

 
23.9

Gains and losses included in the Condensed Consolidated Statements of Income*
(0.2
)
 
(0.2
)
Ending balance
23.7

 
23.7

____________
*
Included in gains/(losses) of CIP, net in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2017 are $3.6 million and $12.4 million respectively, in net unrealized gains attributable to investments still held at September 30, 2017 by CIP. Included in gains/(losses) of CIP, net in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2016 are $0.2 million in net unrealized losses attributable to investments still held at September 30, 2016 by CIP.
Unforeseen events might occur that would subsequently change the fair values of the investments (and therefore the debt of CLOs, since it is measured as a calculated value based upon the fair value of the assets of CLOs, but the impact of such changes would be limited to the change in the fair values of the company's investments in these products. The impact of any gains or losses resulting from valuation changes in the investments of non-CLO CIP attributable to the interests of third parties are offset by resulting changes in gains and losses attributable to noncontrolling interests in consolidated entities and therefore do not have a material effect on the financial condition, operating results (including earnings per share), liquidity or capital resources of the company's common shareholders. Similarly, any gains or losses resulting from valuation changes in the investments of CLOs attributable to the interests of third parties are offset by the calculated value of the notes issued by the CLOs (offsetting in other gains/(losses) of CIP) and therefore also do not have a material effect on the financial condition, operating results (including earnings per share), liquidity or capital resources of the company's common shareholders.
Value of consolidated CLOs
The company elected the fair value option for collateral assets held and notes issued by its consolidated CLOs to eliminate the measurement and recognition inconsistency that would otherwise arise from measuring assets and liabilities and recognizing the related gains and losses on different accounting bases. On January 1, 2015 the company adopted ASU 2014-13 and has elected the measurement alternative for the consolidated CLOs under which the notes issued by the CLOs are measured based on the fair value of the assets of the CLOs.
The collateral assets held by consolidated CLOs are primarily invested in senior secured bank loans, bonds, and equity securities. Bank loan investments of $4,305.4 million , which comprise the majority of consolidated CLO portfolio collateral, are senior secured corporate loans from a variety of industries, including but not limited to the aerospace and defense, broadcasting, technology, utilities, household products, healthcare, oil and gas, and finance industries. Bank loan investments mature at various dates between 2017 and 2025 , pay interest at LIBOR plus a spread of up to 10.0% , and typically range in S&P credit rating categories from BBB down to unrated. Interest income on bank loans and bonds is recognized based on the unpaid principal balance and stated interest rate of these investments on an accrual basis. At September 30, 2017 , the unpaid principal balance exceeds the fair value of the senior secured bank loans and bonds by approximately $87.4 million

29


    

                                    

( December 31, 2016 : the unpaid principal balance exceeded the fair value of the senior secured bank loans and bonds by approximately $96.6 million ). Approximately 0.87% of the collateral assets are in default as of September 30, 2017 ( December 31, 2016 : approximately 0.3% of the collateral assets were in default). CLO investments are valued based on price quotations provided by third party pricing sources. These third party sources aggregate indicative price quotations daily to provide the company with a price for the CLO investments. The company has developed internal controls to review the reasonableness and completeness of these price quotations on a daily basis. If necessary, price quotations are challenged through the third-party pricing source price challenge process.
In addition, the company's internal valuation committee conducts an annual due diligence review of all independent third-party pricing sources to review the provider's valuation methodology as well as ensure internal controls exist over the valuation of the CLO investments. In the event that the third-party pricing source is unable to price an investment, other relevant factors, data and information are considered, including: i) information relating to the market for the investment, including price quotations for and trading in the investment and interests in similar investments, the market environment, and investor attitudes towards the investment and interests in similar investments; ii) the characteristics of and fundamental analytical data relating to the investment, including, for senior secured corporate loans, the cost, size, current interest rate, period until next interest rate reset, maturity and base lending rate, the terms and conditions of the senior secured corporate loan and any related agreements, and the position of the senior secured corporate loan in the borrower's debt structure; iii) the nature, adequacy and value of the senior secured corporate loan's collateral, including the CLO's rights, remedies and interests with respect to the collateral; iv) for senior secured corporate loans, the creditworthiness of the borrower, based on an evaluation of its financial condition, financial statements and information about the business, cash flows, capital structure and future prospects; v) the reputation and financial condition of the agent and any intermediate participants in the senior secured corporate loan; and vi) general economic and market conditions affecting the fair value of the senior secured corporate loan.
Notes issued by consolidated CLOs mature at various dates between 2025 and 2030 and have a weighted average maturity of 9.9 years . The notes are issued in various tranches with different risk profiles. The interest rates are generally variable rates based on LIBOR plus a pre-defined spread, which varies from 1.15% for the more senior tranches to 8.25% for the more subordinated tranches. The investors in this debt are not affiliated with the company and have no recourse to the general credit of the company for this debt .
Fair value of consolidated real estate funds
The real estate investment vehicles use one or more valuation techniques (e.g. the market approach, the income approach, or the recent transaction "cost" approach) for which sufficient and reliable data is available to value investments classified within level 3. The use of the market approach generally consists of using comparable market transactions, while the use of the income approach generally consists of the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
The inputs used by the real estate funds in estimating the value of level 3 investments include the original transaction price, recent transactions in the same or similar instruments, as well as completed or pending third-party transactions in the underlying investment or comparable investments. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability. Other inputs used include discount rates, cap rates, and income and expense assumptions. The fair value measurement of level 3 investments does not include transaction costs and acquisition fees that may be capitalized as part of the investment's cost basis.
Fair value of consolidated partnership entities
Consolidated private equity funds are generally structured as partnerships. Generally, the investment strategy of underlying holdings in these partnerships is to seek capital appreciation through direct investments in public or private companies with compelling business models or ideas or through investments in partnership investments that also invest in similar private or public companies. Various strategies may be used. Companies targeted could be distressed organizations, targets of leveraged buyouts or fledgling companies in need of venture capital. Investors generally may not redeem their investment until the partnership liquidates. Generally, the partnerships have a life that ranges from seven to twelve years unless dissolved earlier. The general partner may extend the partnership term up to a specified period of time as stated in the Partnership Agreement. Some partnerships allow the limited partners to cause an earlier termination upon the occurrence of certain events as specified in the Partnership Agreement.
For private equity partnerships, fair value is determined by reviewing each investment for the sale of additional securities of an issuer to sophisticated investors or for investee financial conditions and fundamentals. Publicly traded portfolio investments are carried at market value as determined by their most recent quoted sale, or if there is no recent sale, at their most recent bid price. For these investments held by CIP, level 1 classification indicates that fair values have been determined using unadjusted quoted prices in active markets for identical assets that the partnership has the ability to access. Level 2 classification may

30


    

                                    

indicate that fair values have been determined using quoted prices in active markets but give effect to certain lock-up restrictions surrounding the holding period of the underlying investments.
The fair value of level 3 investments held are derived from inputs that are unobservable and which reflect the limited partnerships' own determinations about the assumptions that market participants would use in pricing the investments, including assumptions about risk. These inputs are developed based on the partnership's own data, which is adjusted if information indicates that market participants would use different assumptions. The partnerships which invest directly into private equity portfolio companies (direct private equity funds) take into account various market conditions, subsequent rounds of financing, liquidity, financial condition, purchase multiples paid in other comparable third-party transactions, the price of securities of other companies comparable to the portfolio company, and operating results and other financial data of the portfolio company, as applicable.
The partnerships which invest into other private equity funds take into account information received from those underlying funds, including their reported net asset values and evidence as to their fair value approach, including consistency of their fair value application. These investments do not trade in active markets and represent illiquid long-term investments that generally require future capital commitments. The partnerships' reported share of the underlying net asset values of the underlying funds is used as a practical expedient, as allowed by ASC Topic 820, in arriving at fair value.
Quantitative Information about Level 3 Fair Value Measurements
The following table shows significant unobservable inputs used in the fair value measurement of level 3 assets at September 30, 2017 :
Assets and Liabilities
 
Fair Value at
September 30, 2017
($ in millions)
 
Valuation Technique
 
Unobservable Inputs
 
Range
Weighted Average (by fair value)
Real Estate Investments
 
$63.5
 
Discounted Cash Flow
 
Discount rate
 
7% - 33%

18.0
%
 
 
 
 
 
 
Terminal capitalization rate
 
5.3
%
5.3
%
 
 
 
 
 
 
Average rent growth rate
 
2% - 3%

2.5
%
At December 31, 2016 , $40.7 million of investments held by consolidated real estate funds were valued using recent private market transactions.
The following narrative will indicate the sensitivity of inputs illustrating the impact of significant increases to the inputs. A directionally opposite impact would apply for significant decreases in these inputs:
•
For real estate investments, a change in the average rent growth rate would result in a directionally-opposite change in the assumptions for discount rate and terminal capitalization rate. Significant increases in the average growth rate would result in significantly higher fair values. Significant increases in the assumptions for discount rate and terminal capitalization rate in isolation would result in significantly lower fair value measurements.


31


    

                                    

The table below summarizes as of September 30, 2017 and December 31, 2016 , the nature of investments that are valued using the NAV as a practical expedient and any related liquidation restrictions or other factors which may impact the ultimate value realized.
 
 
September 30, 2017
 
December 31, 2016
in millions, except term data
 
Fair Value
 
Total Unfunded Commitments
 
Weighted Average Remaining Term (2)
 
Fair Value
 
Total Unfunded Commitments
 
Weighted Average Remaining Term (2)
Private equity funds (1)
 
$155.5
 
$58.8
 
5.4 years
 

$68.6

 

$41.9

 
7.0 years
Investments in fixed income fund of funds (3)
 
—

 
—

 
n/a
 

$57.7

 
—

 
n/a
____________
(1)
These investments are not subject to redemption; however, for certain funds, the investors may sell or transfer their interest, which may require approval by the general partner of the underlying funds.
(2)
These investments are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over the weighted average periods indicated.
(3)
Investment may be redeemed on a monthly basis.
For investments held by consolidated private equity funds, significant increases in discounts in isolation would result in significantly lower fair value measurements, while significant increases in revenue multiple assumptions in isolation would result in significantly higher fair value measurements. An increase in discount assumptions would result in a directionally opposite change in the assumptions for revenue multiple, resulting in lower fair value measurements.
Fair Value of Equity Securities, Bonds, and Equity/Fixed Income Mutual Funds
Equity securities are valued under the market approach through use of quoted prices on an exchange. To the extent these securities are actively traded, valuation adjustments are not applied and they are categorized within level 1 of the valuation hierarchy; otherwise, they are categorized in level 2.
Bonds are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Depending on the nature of the inputs, these investments are categorized as level 1, 2, or 3.
Equity and fixed income mutual funds are valued under the market approach through the use of quoted market prices available in an active market and are classified within level 1 of the valuation hierarchy; there is no modeling or additional information needed to arrive at the fair values of these investments.

13 . RELATED PARTIES
Certain managed funds are deemed to be affiliated entities under the related party definition in ASC 850, "Related Party Disclosures." Additionally, related parties include those defined in the company's proxy statement.
 
Three months ended September 30,
 
Nine months ended September 30,
$ in millions
2017
 
2016
 
2017
 
2016
Affiliated operating revenues:
 
 
 
 
 
 
 
Investment management fees
937.0

 
835.5

 
2,654.5

 
2,452.5

Service and distribution fees
217.2

 
213.1

 
634.1

 
613.7

Performance fees
40.5

 
2.9

 
52.1

 
19.7

Other
14.9

 
18.0

 
46.0

 
64.5

Total affiliated operating revenues
1,209.6

 
1,069.5

 
3,386.7

 
3,150.4


32


    

                                    

$ in millions
September 30, 2017
 
December 31, 2016
Affiliated asset balances:
 
 
 
Cash and cash equivalents
769.0

 
476.2

Unsettled fund receivables
180.1

 
253.2

Accounts receivable
314.7

 
344.4

Investments
597.1

 
728.3

Assets held for policyholders
12,102.2

 
8,224.2

Other assets
4.6

 
2.9

Total affiliated asset balances
13,967.7

 
10,029.2

 
 
 
 
Affiliated liability balances:
 
 
 
Accrued compensation and benefits
125.0

 
76.5

Accounts payable and accrued expenses
66.7

 
94.7

Unsettled fund payables
418.2

 
318.7

Total affiliated liability balances
609.9

 
489.9

14 . BUSINESS OPTIMIZATION

Business optimization charges of $12.3 million and $49.0 million were recorded during the three and nine months ended September 30, 2017 , respectively ( three and nine months ended September 30, 2016 : $11.7 million and $28.9 million , respectively). Business optimization charges for the three and nine months ended September 30, 2017 includes staff severance costs recorded in employee compensation of $7.6 million and $27.2 million , respectively ( three and nine months ended September 30, 2016 : $5.8 million and $14.2 million , respectively), consulting and temporary labor costs of $4.5 million and $19.6 million , respectively ( three and nine months ended September 30, 2016 : $5.4 million and $14.1 million , respectively) and office and technology expenses associated with a business transformation initiative of $0.2 million and $2.2 million , respectively ( three and nine months ended September 30, 2016 : $0.5 million and $0.6 million , respectively). This is a continuation of efforts to transform several key business support functions to become more effective and efficient by leveraging shared service centers, outsourcing, automation of key processes and optimization of the company's office footprint. The total costs of these initiatives at completion are estimated to be up to $155 million , of which approximately $40 million remains to be incurred through 2018. There were no material liabilities related to business optimization efforts outstanding at  September 30, 2017 .

15 .   SUBSEQUENT EVENTS
On October 26, 2017 , the company announced a third quarter 2017 dividend of 29.0 cents per share, payable on December 4, 2017 , to shareholders of record at the close of business on November 14, 2017 with an ex-dividend date of November 13, 2017 .





33


    

                                    

Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and related Notes thereto, which appear elsewhere in this Report. Except for the historical financial information, this Report may include statements that constitute “forward-looking statements” under the United States securities laws. Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, assets under management, geopolitical events and their potential impact on the company, acquisitions and divestitures, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “forecasts,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would” as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements.
Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in this Report and our most recent Form 10-K filed with the Securities and Exchange Commission ("SEC").
You may obtain these reports from the SEC’s website at www.sec.gov . We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate.
References
In this Report, unless otherwise specified, the terms “we,” “our,” “us,” “company,” "firm," “Invesco,” and “Invesco Ltd.” refer to Invesco Ltd., a company incorporated in Bermuda, and its subsidiaries.
Executive Overview
The following executive overview summarizes the significant trends affecting our results of operations and financial condition for the periods presented. This overview and the remainder of this management's discussion and analysis supplements and should be read in conjunction with the Condensed Consolidated Financial Statements of Invesco Ltd. and its subsidiaries and the notes thereto contained elsewhere in this Report.
During the three months ended September 30, 2017 , returns from global equity markets continued to remain positive on strong economic outlook and accelerating global growth. In the U.S., equities advanced while volatility remained low as strong corporate earnings growth and high consumer confidence pushed the market broadly higher. The outlook for fiscal expansion and tax reform drove the S&P 500 Index to new all-time highs during the quarter and finished the period up 4.0%. European markets were similarly helped by improving consumer confidence and outlook for future growth. The European Central Bank continued to indicate imminent slowing of economic stimulus and the Bank of England hinted at near-term interest rate increases which helped to push the FTSE 100 higher 0.8% for the quarter. In Japan, equities continued to strengthen as global growth helped to drive exports higher. While regional geopolitical tensions pressured the markets during the quarter, broad investor optimism helped to lead markets higher with the Nikkei 225 finishing the quarter up 1.6%.
Bond returns for the quarter were positive as continuing accommodative monetary policy and low default rates globally helped to drive bonds higher. Prices were strong early in the quarter but declined late in the quarter as the potential for near-term changes in central bank policy continued to increase driving the U.S. Aggregate Bond Index higher by 0.9%.


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The table below summarizes returns based on price appreciation/(depreciation) of several major market indices for the three- and nine-month periods ended September 30 , 2017 and 2016 :
 
Index expressed in currency
Three months ended September 30,
 
Nine months ended September 30,
Equity Index
2017
 
2016
 
2017
 
2016
S&P 500
U.S. Dollar
4.0
%
 
3.3
%
 
12.5
%
 
6.1
 %
FTSE 100
British Pound
0.8
%
 
6.1
%
 
3.2
%
 
10.5
 %
FTSE 100
U.S. Dollar
3.8
%
 
3.7
%
 
12.0
%
 
(2.7
)%
Nikkei 225
Japanese Yen
1.6
%
 
5.6
%
 
6.5
%
 
(13.6
)%
Nikkei 225
U.S. Dollar
1.4
%
 
7.4
%
 
10.3
%
 
2.8
 %
MSCI Emerging Markets
U.S. Dollar
7.0
%
 
8.3
%
 
25.5
%
 
13.8
 %
Bond Index
 
 
 
 
 
 
 
 
Barclays U.S. Aggregate Bond
U.S. Dollar
0.9
%
 
0.5
%
 
3.1
%
 
5.8
 %
The company's financial results are impacted by the strengthening or weakening of the U.S. Dollar against other currencies, as discussed in the "Foreign Exchange Impact on Balance Sheet, Assets Under Management and Results of Operations" section and the "Results of Operations" section below. The ongoing uncertainty associated with the Brexit negotiations are likely to continue to keep the Pound Sterling at a low level against the U.S. Dollar when compared to the average exchange rates of recent years, negatively impacting our reported AUM and results in U.S. Dollars. The negotiations may also have a similar ongoing impact to the Euro. As further detailed in the Results of Operations section, foreign exchange rate movements decreased operating revenues by $67.3 million , equivalent to 1.8% of total operating revenues, during the nine months ended September 30, 2017 when compared to the nine months ended September 30, 2016 . The company has entered into a series of put option contracts to provide Pound Sterling/U.S. Dollar and Euro/U.S. Dollar exchange rate coverage through December 2017 (Euro) and December 2018 (Pound Sterling). Any gains derived from these hedges will help offset the impact on earnings per share resulting from declines in Sterling and Euro exchange rates.

Our revenues are directly influenced by the level and composition of our AUM. Therefore, movements in global capital market levels, net new business inflows (or outflows) and changes in the mix of investment products between asset classes and geographies may materially affect our revenues from period to period. As fee rates differ across geographic locations, changes to exchange rates have an impact on the net revenue yields. The strengthening of the U.S. Dollar against the Pound Sterling during the nine months ended   September 30, 2017 when compared to the respective prior period resulted in a reduction in the net revenue yield as it reduced the weighting of higher fee earning AUM attributable to the U.K. products. This gradual change in the product mix combined with changes in foreign exchange rates results in changes in the average revenue yield derived from AUM due to differing fee rates structures and currencies.

Invesco benefits from our long-term efforts to ensure a diversified base of AUM. One of Invesco's core strengths, and a key differentiator for the company within the industry, is our broad diversification across client domiciles, asset classes and distribution channels. Our geographical diversification recognizes growth opportunities in different parts of the world. This broad diversification mitigates the impact on Invesco of different market cycles and enables the company to take advantage of growth opportunities in various markets and channels. During the nine months ended September 30, 2017 , while the company experienced flat flows in the U.S. and long-term net outflows in our U.K. and Canadian operations, our Continental European and Asia Pacific operations contributed strong positive long-term net flows.
Europe will see the update to the Markets in Financial Instrument Directive (MiFID II) come into effect in January 2018. Invesco is committed to ensuring our investment professionals have access to the external research market in order to achieve our long-term investment performance goals. Therefore, the company has announced that, beginning in January 2018, external research costs incurred for MiFID II impacted funds and client accounts in Europe will be absorbed by the company. We do not expect these costs to be material to the company's financial statements.

On August 18, 2017, Invesco acquired 100% of the outstanding shares of Source Holdings Limited. Source is a leading independent specialist provider of exchange-traded funds (ETFs) based in Europe, which added $26.0 billion in AUM at acquisition date. The combination strengthens Invesco's existing factor-based capabilities, provides additional scale and relevance in the European ETF market and enhances the firm's ability to meet client needs globally.
As previously announced, the company has entered into a definitive agreement to acquire Guggenheim Investments' ETF business, which includes 79 ETFs with $37.3 billion of assets under management as of September 30, 2017. The acquisition is expected to close in the second quarter of 2018 for an anticipated purchase price of $1.2 billion to be paid in cash. The

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acquisition will expand the depth, breadth and diversity of Invesco's traditional and smart beta ETFs, while providing additional scale and relevance in the global growing ETF market. It will also build on our existing self-indexing capability and bring in highly complementary capabilities that further strengthen our ability to deliver the outcomes clients seek and position us for accelerated growth in the future.

Invesco continues to demonstrate its commitment to supporting financial advisors with industry leading tools and resources, as we believe these areas are key to delivering superior investment experiences. The range of investment capabilities available through Jemstep are broad across the firm's active, alternative and ETF offerings. Additionally, Jemstep offers open architecture to help advisors provide customized solutions for clients. As a market-leading provider of digital solutions, Jemstep continues to expand its capabilities and market presence, and is an integral part of Invesco's growth strategy. 


In addition, during the third quarter of 2017 :
•
Invesco was awarded an A+ rating for the overall approach to responsible investment (strategy and governance) in the 2017 PRI (Principles for Responsible Investment) assessment. The PRI carries out the annual assessment based on how a signatory has progressed year-over-year and relative to peers.
•
To help investors diversify their income portfolios, Invesco launched two new income-focused ETFs, which provide exposure to intermediate-term corporate bonds and REITs to Canadian real estate investment trusts.
•
Invesco Taiwan launched its first Fixed Maturity Plan (FMP) - Emerging Market Bond Fund that is designed to meet the rising demand for fixed maturity products among Taiwan’s retail investors.
•
Invesco Real Estate (IRE) launched an open-ended fund investing in the pan-European (ex-UK) hotel sector and closed the acquisition of a €530m pan-European hotel portfolio, in one of the industry’s largest pan-European deals of institutional investment into the hotel real estate sector in 2017.
•
Invesco Perpetual was the winner at the 2017 Investment Life & Pensions Moneyfacts Awards and received the Best Targeted Absolute Return Fund provider Winner Award, as well as the Highly Commended Best Investment Fund Provider Award.
•
Invesco Income Growth Trust received recognition as the investment trust to increase its dividend every year for at least the past 20 years, according to the Association of Investment Companies.

One of the company's strategic objectives is to harness the power of our global platform by improving effectiveness and efficiency by allocating our resources to the opportunities that will best benefit clients and our business. During 2017, the company has continued our efforts to transform several key business support functions to become more effective and efficient by leveraging shared service centers, outsourcing, automation of key processes and optimization of the company's office footprint. Consistent with this objective, business optimization charges of $49.0 million were recorded during the nine months ended September 30, 2017 . Total costs of these initiatives at completion are estimated to be approximately $155 million , of which $40 million remains to be incurred through 2018. As at the end of the third quarter 2017 , this initiative has produced annualized run-rate expense savings of approximately $38 million , and by completion in 2018, the annualized run-rate savings is expected to be up to $65 million .

   
Presentation of Management's Discussion and Analysis of Financial Condition and Results of Operations - Impact of Consolidated Investment Products
The company provides investment management services to, and has transactions with, various private equity, real estate, fund-of-funds, collateralized loan obligation products (CLOs), and other investment entities sponsored by the company for the investment of client assets in the normal course of business. The company serves as the investment manager, making day-to-day investment decisions concerning the assets of the products. Investment products that are consolidated are referred to in this Form 10-Q (Report) as consolidated investments products (CIP). CIP includes all variable and voting interest entities, as applicable, with effect from the adoption of ASU 2015-02. The company's economic risk with respect to each investment in CIP is limited to its equity ownership and any uncollected management and performance fees. See also Note 12 , "Consolidated Investment Products," for additional information regarding the impact of the consolidation of managed funds.
The majority of the company's CIP balances are CLO-related. The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs. The company has no right to the benefits from, nor does it bear the risks associated with, the collateral assets held by the CLOs, beyond the company's direct investments in, and management and performance fees generated from, the CLOs. If the company were to liquidate, the collateral assets would not be available to the general creditors of the company, and as a result, the company does not consider them to be company assets. Likewise, the investors in the CLOs have no

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recourse to the general credit of the company for the notes issued by the CLOs. The company therefore does not consider this debt to be a company liability.
The impact of CIP is so significant to the presentation of the company’s Condensed Consolidated Financial Statements that the company has elected to deconsolidate these products in its non-GAAP disclosures. The following discussion therefore combines the results presented under U.S. generally accepted accounting principles (U.S. GAAP) with the company’s non-GAAP presentation. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains four distinct sections, which follows the AUM discussion:
•
Results of Operations ( three and nine months ended September 30, 2017 compared to three and nine months ended September 30, 2016 );
•
Schedule of Non-GAAP Information;
•
Balance Sheet Discussion; and
•
Liquidity and Capital Resources.
To assess the impact of CIP on the company's results of operations and balance sheet, refer to Part I, Item 1, Financial Statements, Note 12 - “Consolidated Investment Products.” The impact on the company's results of operations is illustrated by a column which shows the dollar-value change in the consolidated figures, as caused by the consolidation of CIP. For example, the impact of CIP on operating revenues for the three and nine months ended September 30, 2017 was a reduction of $6.2 million and a reduction of $25.7 million , respectively. This indicates that their consolidation reduced consolidated revenues by this amount, reflecting the elimination upon their consolidation of the operating revenues earned by Invesco for managing these investment products.
Wherever a non-GAAP measure is referenced, a disclosure will follow in the narrative or in the note referring the reader to the Schedule of Non-GAAP Information, where additional details regarding the use of the non-GAAP measure by the company are disclosed, along with reconciliations of the most directly comparable U.S. GAAP measures to the non-GAAP measures. To further enhance the readability of the Results of Operations section, separate tables for each of the revenue, expense, and other income and expenses (non-operating income/expense) sections of the income statement introduce the narrative that follows, providing a section-by-section review of the company’s income statements for the periods presented.

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Summary Operating Information
Summary operating information is presented in the table below:
$ in millions, other than per share amounts, operating margins, ratios and AUM
Three months ended September 30,
 
Nine months ended September 30,
U.S. GAAP Financial Measures Summary
2017
 
2016
 
2017
 
2016
Operating revenues
1,337.7

 
1,201.6

 
3,784.7

 
3,539.7

Operating income
355.3

 
306.3

 
932.8

 
882.2

Operating margin
26.6
%
 
25.5
%
 
24.6
%
 
24.9
%
Net income attributable to Invesco Ltd.
267.5

 
241.2

 
719.1

 
627.7

Diluted Earnings Per Share (EPS)
0.65

 
0.58

 
1.76

 
1.51

 
 
 
 
 
 
 
 
Non-GAAP Financial Measures Summary
 
 
 
 
 
 
 
Net revenues (1)
976.6

 
854.7

 
2,750.0

 
2,529.4

Adjusted operating income (2)
397.4

 
339.3

 
1,081.0

 
976.8

Adjusted operating margin (2)
40.7
%
 
39.7
%
 
39.3
%
 
38.6
%
Adjusted net income attributable to Invesco Ltd. (3)
291.8

 
246.2

 
806.8

 
684.0

Adjusted diluted EPS (3)
0.71

 
0.60

 
1.97

 
1.64

 
 
 
 
 
 
 
 
Assets Under Management
 
 
 
 
 
 
 
Ending AUM (billions)
917.5

 
820.2

 
917.5

 
820.2

Average AUM (billions)
890.8

 
814.1

 
856.6

 
782.0

_________

(1)
Net revenues is a non-GAAP financial measure. Net revenues are operating revenues plus our proportional share of the net revenues of our joint venture investments, less third-party distribution, service and advisory expenses, plus management and performance fees earned from CIP. See "Schedule of Non-GAAP Information," for the reconciliation of operating revenues to net revenues.
(2)
Adjusted operating income and adjusted operating margin are non-GAAP financial measures. Adjusted operating margin is adjusted operating income divided by net revenues. Adjusted operating income includes operating income plus our proportional share of the net operating income of our joint venture investments, the operating income impact of the consolidation of investment products, business combination-related adjustments, compensation expense related to market valuation changes in deferred compensation plans, and other reconciling items. See "Schedule of Non-GAAP Information," for the reconciliation of operating income to adjusted operating income.
(3)
Adjusted net income attributable to Invesco Ltd. and adjusted diluted EPS are non-GAAP financial measures. Adjusted net income attributable to Invesco Ltd. is net income attributable to Invesco Ltd. adjusted to exclude the impact of CIP on net income attributable to Invesco Ltd., add back business combination-related adjustments, the net income impact of deferred compensation plans and other reconciling items. Adjustments made to net income attributable to Invesco Ltd. are tax-effected in arriving at adjusted net income attributable to Invesco Ltd. By calculation, adjusted diluted EPS is adjusted net income attributable to Invesco Ltd. divided by the weighted average number of shares outstanding (for diluted EPS). See "Schedule of Non-GAAP Information," for the reconciliation of net income attributable to Invesco Ltd. to adjusted net income attributable to Invesco Ltd.



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Investment Capabilities Performance Overview
Invesco's first strategic priority is to achieve strong investment performance over the long-term for our clients. The table below presents the one-, three- and five-year performance of our actively managed investment products measured by the percentage of AUM ahead of benchmark and AUM in the top half of peer group. (1)
 
Benchmark Comparison
 
Peer Group Comparison
 
% of AUM Ahead of Benchmark
 
% of AUM In Top Half of Peer Group
 
1yr
3yr
5yr
 
1yr
3yr
5yr
Equities
 
 
 
 
 
 
 
U.S. Core
22
%
—
%
6
%
 
17
%
—
%
6
%
U.S. Growth
87
%
9
%
83
%
 
87
%
9
%
83
%
U.S. Value
52
%
54
%
88
%
 
52
%
58
%
92
%
Sector Funds
80
%
14
%
57
%
 
60
%
13
%
17
%
U.K.
12
%
21
%
100
%
 
13
%
11
%
17
%
Canadian
66
%
10
%
39
%
 
66
%
10
%
33
%
Asian
66
%
87
%
92
%
 
81
%
81
%
89
%
Continental European
66
%
99
%
100
%
 
54
%
72
%
95
%
Global
47
%
59
%
77
%
 
49
%
82
%
82
%
Global Ex U.S. and Emerging Markets
18
%
24
%
90
%
 
3
%
17
%
3
%
Fixed Income
 
 
 
 
 
 
 
Money Market
98
%
99
%
71
%
 
97
%
98
%
98
%
U.S. Fixed Income
82
%
88
%
89
%
 
67
%
87
%
83
%
Global Fixed Income
84
%
56
%
81
%
 
82
%
39
%
74
%
Stable Value
100
%
100
%
100
%
 
100
%
100
%
100
%
Other
 
 
 
 
 
 
 
Alternatives
75
%
75
%
65
%
 
50
%
79
%
50
%
Balanced
83
%
48
%
51
%
 
69
%
92
%
88
%
_____________________________
(1)
AUM measured in the one-, three-, and five-year peer group rankings represents 58%, 57%, and 54% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one-, three-, and five-year basis represents 70%, 68%, and 63% of total Invesco AUM, respectively, as of September 30, 2017. Peer group rankings are sourced from a widely-used third party ranking agency in each fund's market (Lipper, Morningstar, IA, Russell, Mercer, eVestment Alliance, SITCA, Value Research) and are asset-weighted in U.S. Dollars. Rankings are as of prior quarter-end for most institutional products and preceding month-end for Australian retail funds due to their late release by third parties. Rankings for the most representative fund in each Global Investment Performance Standard (GIPS) composite are applied to all products within each GIPS composite. Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary direct real estate, unit investment trusts, fund-of-funds with component funds managed by Invesco, stable value building block funds, and Collateralized Debt Obligations (CDOs). Certain funds and products were excluded from the analysis because of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor's experience.


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Foreign Exchange Impact on Balance Sheet, Assets Under Management and Results of Operations
A significant portion of our business is based outside of the U.S. The strengthening or weakening of the U.S. Dollar against other currencies, primarily the Pound Sterling, Canadian Dollar, Euro and Japanese Yen will impact our assets, liabilities, AUM and reported revenues and expenses from period to period. The assets, liabilities and AUM of foreign subsidiaries are translated at period end spot foreign currency exchange rates. The income statements of foreign currency subsidiaries are translated into U.S. Dollars, the reporting currency of the company, using average foreign exchange rates.
The table below illustrates the spot foreign exchange rates used for translation of non-U.S. Dollar denominated assets, liabilities and AUM into U.S. Dollars:
Spot Foreign Exchange Rates
September 30, 2017
 
June 30, 2017
 
December 31, 2016
 
September 30, 2016
 
June 30, 2016
 
December 31, 2015
Pound Sterling ($ per £)
1.342

 
1.299

 
1.236

 
1.299

 
1.337

 
1.474

Canadian Dollar (CAD per $)
1.250

 
1.299

 
1.341

 
1.314

 
1.300

 
1.389

Japan (¥ per $)
112.575

 
112.375

 
116.600

 
101.275

 
102.533

 
120.275

Euro ($ per Euro)
1.182

 
1.140

 
1.054

 
1.124

 
1.111

 
1.086

The table below illustrates the average foreign exchange rates used for translation of non-U.S. Dollar denominated income, including revenues and expenses, into U.S. Dollars:
 
Three months ended September 30,
 
Nine months ended September 30,
Average Foreign Exchange Rates
2017
 
2016
 
2017
 
2016
Pound Sterling ($ per £)
1.308

 
1.314

 
1.275

 
1.393

Canadian Dollar (CAD per $)
1.253

 
1.304

 
1.306

 
1.321

Japan (¥ per $)
110.906

 
102.380

 
111.888

 
108.328

Euro ($ per Euro)
1.174

 
1.116

 
1.113

 
1.116

A comparison of period end spot rates between September 30, 2017 and December 31, 2016 shows a strengthening of the Pound Sterling, the Euro, Canadian Dollar and Japanese Yen relative to the U.S. Dollar, which is reflected in the translation of our Pound Sterling-based, Euro-based, Canadian Dollar-based and Japanese Yen-based assets, liabilities and AUM into U.S. Dollars, respectively.
A comparison of the average foreign exchange rates used for the three months ended September 30, 2017 when compared to the three months ended September 30, 2016 shows a weakening of the Pound Sterling and Japanese Yen relative to the U.S Dollar, while the Euro and Canadian Dollar both strengthened, which is reflected in the translation of our Pound Sterling-based, Japanese Yen-based, Canadian Dollar-based and Euro-based revenue and expenses into U.S. Dollars. A comparison of the average foreign exchange rates used for the nine months ended September 30, 2017 when compared to the nine months ended September 30, 2016 shows a weakening of the Pound Sterling, Japanese Yen and Euro relative to the U.S Dollar, while the Canadian Dollar strengthened.



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Assets Under Management movements for the three and nine months ended September 30, 2017 compared with the three and nine months ended September 30, 2016
The following presentation and discussion of AUM includes Passive and Active AUM. Passive AUM include ETFs, UITs, leveraged fund balances upon which we do not earn a fee, and other passive mandates. Active AUM are total AUM less Passive AUM.
The AUM tables and the discussion below refer to AUM as long-term. Long-term AUM excludes institutional money market and Invesco PowerShares QQQ AUM. Long-term inflows and the underlying reasons for the movements in this line item include investments from new clients, existing clients adding new accounts/funds or contributions/subscriptions into existing accounts/funds, new funding commitments into private equity funds. Beginning with the three months ended September 30, 2017, reinvested dividends and capital gains are also included in long-term inflows. For previous periods, reinvested dividends and capital gains were included in market gains and losses. Long-term outflows reflect client redemptions from accounts/funds and include the return of invested capital on the maturity or liquidation of private equity funds. We present net flows into institutional money market funds separately because shareholders of those funds typically use them as short-term funding vehicles and because their flows are particularly sensitive to short-term interest rate movements. The net flows in Invesco PowerShares QQQ AUM can also be relatively short-term in nature and, due to the relatively low revenue yield, these can have a significant impact on overall net revenue yield.
Changes in AUM were as follows:
 
For the three months ended September 30,
 
2017
 
2016
$ in billions
Total AUM
 
Active
 
Passive
 
Total AUM
 
Active
 
Passive
June 30
858.3

 
701.7

 
156.6

 
779.6

 
646.1

 
133.5

Long-term inflows (1)
49.4

 
36.2

 
13.2

 
51.7

 
39.9

 
11.8

Long-term outflows
(43.1
)
 
(32.3
)
 
(10.8
)
 
(39.5
)
 
(31.6
)
 
(7.9
)
Long-term net flows
6.3

 
3.9

 
2.4

 
12.2

 
8.3

 
3.9

Net flows in Invesco PowerShares QQQ fund
(0.2
)
 
—

 
(0.2
)
 
1.1

 
—

 
1.1

Net flows in institutional money market funds
5.4

 
5.4

 
—

 
5.9

 
6.0

 
(0.1
)
Total net flows
11.5

 
9.3

 
2.2

 
19.2

 
14.3

 
4.9

Market gains and losses (1)
15.0

 
9.3

 
5.7

 
23.6

 
18.7

 
4.9

Acquisitions/dispositions, net
26.0

 
—

 
26.0

 
—

 
—

 
—

Foreign currency translation
6.7

 
6.7

 
—

 
(2.2
)
 
(2.2
)
 
—

September 30
917.5

 
727.0

 
190.5

 
820.2

 
676.9

 
143.3

Average AUM
 
 
 
 
 
 
 
 
 
 
 
Average long-term AUM
762.2

 
640.8

 
121.4

 
705.9

 
603.7

 
102.2

Average AUM
890.8

 
717.0

 
173.8

 
814.1

 
673.1

 
141.0

Revenue yield
 
 
 
 
 
 
 
 
 
 
 
Gross revenue yield on AUM (2)
60.7

 
71.6

 
15.9

 
59.8

 
69.3

 
15.3

Gross revenue yield on AUM before performance fees (2)
58.7

 
69.2

 
15.9

 
59.6

 
69.1

 
15.3

Net revenue yield on AUM (3)
43.9

 
50.6

 
15.9

 
42.0

 
47.6

 
15.3

Net revenue yield on AUM before performance fees (3)
41.9

 
48.2

 
15.9

 
41.8

 
47.4

 
15.3


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For the nine months ended September 30,
 
2017
 
2016
$ in billions
Total AUM
 
Active
 
Passive
 
Total AUM
 
Active
 
Passive
December 31
812.9

 
668.5

 
144.4

 
775.6

 
636.5

 
139.1

Long-term inflows (1)
140.8

 
107.2

 
33.6

 
140.3

 
106.3

 
34.0

Long-term outflows
(133.3
)
 
(104.0
)
 
(29.3
)
 
(124.9
)
 
(97.5
)
 
(27.4
)
Long-term net flows
7.5

 
3.2

 
4.3

 
15.4

 
8.8

 
6.6

Net flows in Invesco PowerShares QQQ fund
1.0

 
—

 
1.0

 
(5.3
)
 
—

 
(5.3
)
Net flows in institutional money market funds
0.1

 
0.1

 
—

 
11.7

 
12.0

 
(0.3
)
Total net flows
8.6

 
3.3

 
5.3

 
21.8

 
20.8

 
1.0

Market gains and losses (1)
51.1

 
36.4

 
14.7

 
31.3

 
25.1

 
6.2

Acquisitions/dispositions, net
26.0

 
—

 
26.0

 
(1.2
)
 
2.0

 
(3.2
)
Foreign currency translation
18.9

 
18.8

 
0.1

 
(7.3
)
 
(7.5
)
 
0.2

September 30
917.5

 
727.0

 
190.5

 
820.2

 
676.9

 
143.3

Average AUM
 
 
 
 
 
 
 
 
 
 
 
Average long-term AUM
736.5

 
624.9

 
111.6

 
678.9

 
583.3

 
95.6

Average AUM
856.6

 
695.9

 
160.7

 
782.0

 
648.8

 
133.2

Revenue yield
 
 
 
 
 
 
 
 
 
 
 
Gross revenue yield on AUM (2)
59.5

 
69.6

 
16.4

 
61.0

 
70.7

 
14.6

Gross revenue yield on AUM before performance fees (2)
58.4

 
68.2

 
16.4

 
60.6

 
70.1

 
14.6

Net revenue yield on AUM (3)
42.8

 
48.9

 
16.4

 
43.1

 
49.0

 
14.6

Net revenue yield on AUM before performance fees (3)
41.6

 
47.4

 
16.4

 
42.6

 
48.4

 
14.6


_____________________________
(1)
For the three months ended September 30, 2017, reinvested dividends and capital gains of $1.1 billion are included in long-term inflows. For previous periods, reinvested dividends and capital gains are included in market gains and losses.
(2)
Gross revenue yield on AUM is equal to annualized total operating revenues divided by average AUM, excluding joint venture (JV) AUM. Our share of the average AUM in the three months ended September 30, 2017 for our JVs in China was $8.6 billion ( three months ended September 30, 2016 : $10.4 billion ). It is appropriate to exclude the average AUM of our JVs for purposes of computing gross revenue yield on AUM because the revenues resulting from these AUM are not presented in our operating revenues. Under U.S. GAAP, our share of the net income of the JVs is recorded as equity in earnings of unconsolidated affiliates on our Condensed Consolidated Statements of Income. Additionally, the numerator of the gross revenue yield measure, operating revenues, excludes the management fees earned from CIP; however, the denominator of the measure includes the AUM of these investment products. Therefore, the gross revenue yield measure is not considered representative of the company's true effective fee rate from AUM.
(3)
Net revenue yield on AUM is equal to annualized net revenues divided by average AUM. See “Schedule of Non-GAAP Information” for a reconciliation of operating revenues to net revenues.

Flows
AUM at September 30, 2017 were $917.5 billion ( September 30, 2016 : $820.2 billion ). During the three months ended September 30, 2017 , we experienced long-term net inflows of $6.3 billion , which includes an inflow of $1.1 billion related to reinvested dividends and capital gains. The company also experienced net inflows of institutional money market funds of $5.4 billion , partially offset by outflows of Invesco PowerShares QQQ of $0.2 billion during the period. Long-term net inflows during the three months ended September 30, 2017 , were split between actively managed AUM products of $3.9 billion and passive AUM products of $2.4 billion . Long-term net inflows for the period were from our institutional distribution channel of $3.2 billion , and our retail distribution channel of $3.1 billion . On a client domicile basis, long-term net inflows were from the U.S., the U.K. Continental Europe and Asia with inflows of $1.9 billion , $1.1 billion , $3.3 billion and $0.1 billion , respectively. These were partially offset by outflows of $0.1 billion for Canada, during the three months ended September 30, 2017 .
During the three months ended September 30, 2016 , we experienced long-term net inflows of $12.2 billion . We also experienced net inflows in Invesco PowerShares QQQ fund of $1.1 billion and net inflows in institutional money market funds of $5.9 billion during this period. Of the total long-term net inflows during the three months ended September 30,

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2016 , $8.3 billion were in actively managed AUM and $3.9 billion were in passive AUM products. Net long-term inflows were from retail distribution channel of $8.8 billion and our institutional channel of $ 3.4 billion . On a client domicile basis, long-term net inflows of $8.0 billion , $4.2 billion and $0.5 billion for the U.S., Asia and U.K. respectively, were partially offset by long-term net outflows of $0.3 billion and $0.2 billion for Continental Europe and Canada, respectively.
Average AUM during the three months ended September 30, 2017 were $890.8 billion , compared to $814.1 billion for the three months ended September 30, 2016 .
During the nine months ended September 30, 2017 , we experienced long-term net inflows of $7.5 billion which includes an inflow of $1.1 billion related to reinvested dividends and capital gains during the three months ended September 30, 2017 as mentioned above. We also experienced net inflows in the Invesco PowerShares QQQ fund of $1.0 billion and net inflows in institutional money market funds of $0.1 billion during this period. Long-term net inflows during the nine months ended September 30, 2017 included inflows of passive AUM of $4.3 billion , and active AUM of $3.2 billion . Net long-term inflows were comprised of inflows in our retail distribution channel of $6.3 billion and our institutional channel of $1.2 billion . On a client domicile basis, long-term net inflows of $9.0 billion and $0.5 billion in Continental Europe and Asia, respectively, were partially offset by long-term net outflows of $1.8 billion , and $0.2 billion in the U.K. and Canada, respectively, during the nine months ended September 30, 2017 .
During the nine months ended September 30, 2016 , we experienced long-term net inflows of $15.4 billion . We also experienced net inflows in institutional money market funds of $11.7 billion , offset by net outflows in Invesco PowerShares QQQ fund of $5.3 billion during the nine months ended September 30, 2016 . Net inflows during the nine months ended September 30, 2016 included net long-term inflows of active AUM of $8.8 billion and net long-term inflows of passive AUM of $6.6 billion . Net long-term inflows for the period were comprised of inflows in our institutional channel of $9.8 billion and our retail distribution channel of $5.6 billion . On a client domicile basis, long-term net inflows of $11.9 billion and $7.8 billion were experienced in Asia and U.S., respectively, partially offset by long-term net outflows of $2.8 billion , $0.9 billion , and $0.6 billion in Continental Europe, U.K., and Canada, respectively, during the nine months ended September 30, 2016 .
Average AUM during the nine months ended September 30, 2017 were $856.6 billion , compared to $782.0 billion for the nine months ended September 30, 2016 .
Market Returns
During the three months ended September 30, 2017 , positive market movement led to a $15.0 billion increase in AUM, with gains in our equity asset class of $13.1 billion , fixed income class of $0.9 billion and balanced asset class of $0.6 billion . During the three months ended September 30, 2016 , positive market movement led to a $23.6 billion increase in AUM, primarily with gains in the equity asset class of $20.0 billion , fixed income class of $1.9 billion and balanced asset class of $1.5 billion .
During the nine months ended September 30, 2017 , positive market movement led to a $51.1 billion increase in AUM, with gains in our equity asset class of $44.2 billion , fixed income class of $4.6 billion and balanced asset class of $2.1 billion . During the nine months ended September 30, 2016 , positive market movement led to a $31.3 billion increase in AUM, with gains in the equity asset class of $18.0 billion , fixed income class of $7.3 billion , alternatives asset class of $3.2 billion , balanced asset class of $2.5 billion and money market asset class of $0.3 billion .
Acquisitions
During the three months ended September 30, 2017 , we completed the acquisition of Source, which added $26.0 billion in passive ETF AUM at date of purchase.
Foreign Exchange Rates
During the three months ended September 30, 2017 , we experienced increases in AUM of $6.7 billion due to changes in foreign exchange rates. In the three months ended September 30, 2016 , AUM decreased by $2.2 billion due to foreign exchange rate changes. During the nine months ended September 30, 2017 , we experienced increases in AUM of $18.9 billion due to changes in foreign exchange rates. In the nine months ended September 30, 2016 , AUM decreased by $7.3 billion due to foreign exchange rate changes. See the company's disclosures regarding the changes in foreign exchange rates during the three and nine months ended September 30, 2017 in the “Foreign Exchange Impact on Balance Sheet, Assets Under Management and Results of Operations” section above for additional information regarding the movement of foreign exchange rates.

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Revenue Yield
Gross revenue yield on AUM increased   0.9 basis points to  60.7 basis points in the  three months ended   September 30, 2017 from the  three months ended   September 30, 2016 level of  59.8 basis points. Management does not consider gross revenue yield, the most comparable U.S. GAAP-based measure to net revenue yield, to be a meaningful effective fee rate measure for the reasons outlined in footnote 1 to the Changes in AUM table above.
Net revenue yield on AUM increased 1.9 basis point to 43.9 basis points in the  three months ended   September 30, 2017 when compared to the three months ended   September 30, 2016 yield of 42.0 basis points. Excluding performance fees, the net revenue yield increased 0.1 basis points to 41.9 basis points in the  three months ended   September 30, 2017 ( three months ended   September 30, 2016 : 41.8 basis points). Net revenue yield on AUM decreased 0.3 basis points to 42.8 basis points in the  nine months ended   September 30, 2017 when compared to the nine months ended   September 30, 2016 yield of 43.1 basis points. Excluding performance fees, the net revenue yield decreased 1.0 basis points to 41.6 basis points in the  nine months ended   September 30, 2017 ( nine months ended   September 30, 2016 : 42.6 basis points).
As a significant proportion of our AUM is based outside of the U.S., changes in foreign exchange rates result in a change to the mix of U.S. Dollar denominated AUM with AUM denominated in other currencies. As fee rates differ across geographic locations, changes to exchange rates have an impact on the net revenue yields. The strengthening of the U.S. Dollar against the Pound Sterling during the three and nine months ended  September 30, 2017 when compared to the respective prior periods resulted in a reduction in the net revenue yield as it reduced the weighting of higher fee earning AUM attributable to the U.K. products.
Additionally, changes in our AUM mix significantly impact our net revenue yield. For example, on an asset class basis, our equity and balanced AUM generally earn a higher net revenue rate than money market and fixed income AUM. Passive AUM generally generate a lower net revenue yield than active asset classes.  The acquisition of Source in the third quarter of 2017 increased the level of passive AUM and will have a dilutive impact on the company's overall net revenue yield.
At  September 30, 2017 , passive AUM were $190.5 billion , representing  20.8% of total AUM at that date; whereas at September 30, 2016 , passive AUM were $143.3 billion , representing 17.5% of our total AUM at that date. In the three months ended September 30, 2017 , the net revenue yield on passive AUM was 15.9 basis points compared to 15.3 basis points in the three months ended September 30, 2016 , an increase of 0.6 basis points. In the nine months ended September 30, 2017 , the net revenue yield on passive AUM was 16.4 basis points compared to 14.6 basis points in the nine months ended September 30, 2016 , an increase of 1.8 basis points.
 



44

Table of Contents     

    

                                    

Changes in our AUM by channel, asset class, and client domicile, and average AUM by asset class, are presented below:
Total AUM by Channel (1)  
As of and for the Three Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
Retail
 
Institutional
June 30, 2017
858.3

 
572.4

 
285.9

Long-term inflows (2)
49.4

 
38.0

 
11.4

Long-term outflows
(43.1
)
 
(34.9
)
 
(8.2
)
Long-term net flows
6.3

 
3.1

 
3.2

Net flows in Invesco PowerShares QQQ fund
(0.2
)
 
(0.2
)
 
—

Net flows in institutional money market funds
5.4

 
—

 
5.4

Total net flows
11.5

 
2.9

 
8.6

Market gains and losses (2)
15.0

 
14.5

 
0.5

Acquisitions/dispositions, net
26.0

 
26.0

 
—

Foreign currency translation
6.7

 
5.7

 
1.0

September 30, 2017
917.5

 
621.5

 
296.0

 
 
 
 
 
 
June 30, 2016
779.6

 
504.3

 
275.3

Long-term inflows (2)
51.7

 
40.3

 
11.4

Long-term outflows
(39.5
)
 
(31.5
)
 
(8.0
)
Long-term net flows
12.2

 
8.8

 
3.4

Net flows in Invesco PowerShares QQQ fund
1.1

 
1.1

 
—

Net flows in institutional money market funds
5.9

 
—

 
5.9

Total net flows
19.2

 
9.9

 
9.3

Market gains and losses (2)
23.6

 
20.2

 
3.4

Acquisitions/dispositions, net
—

 
—

 
—

Foreign currency translation
(2.2
)
 
(2.3
)
 
0.1

September 30, 2016
820.2

 
532.1

 
288.1

As of and for the Nine Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
Retail
 
Institutional
December 31, 2016
812.9

 
526.5

 
286.4

Long-term inflows (2)
140.8

 
112.0

 
28.8

Long-term outflows
(133.3
)
 
(105.7
)
 
(27.6
)
Long-term net flows
7.5

 
6.3

 
1.2

Net flows in Invesco PowerShares QQQ fund
1.0

 
1.0

 
—

Net flows in institutional money market funds
0.1

 
—

 
0.1

Total net flows
8.6

 
7.3

 
1.3

Market gains and losses (2)
51.1

 
46.9

 
4.2

Acquisitions/dispositions, net
26.0

 
26.0

 
—

Foreign currency translation
18.9

 
14.8

 
4.1

September 30, 2017
917.5

 
621.5

 
296.0

 
 
 
 
 
 
December 31, 2015
775.6

 
514.8

 
260.8

Long-term inflows (2)
140.3

 
108.2

 
32.1

Long-term outflows
(124.9
)
 
(102.6
)
 
(22.3
)
Long-term net flows
15.4

 
5.6

 
9.8

Net flows in Invesco PowerShares QQQ fund
(5.3
)
 
(5.3
)
 
—

Net flows in institutional money market funds
11.7

 
—

 
11.7

Total net flows
21.8

 
0.3

 
21.5

Market gains and losses (2)
31.3

 
24.9

 
6.4

Acquisitions/dispositions, net
(1.2
)
 
0.4

 
(1.6
)
Foreign currency translation
(7.3
)
 
(8.3
)
 
1.0

September 30, 2016
820.2

 
532.1

 
288.1

See accompanying notes immediately following these AUM tables.

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Table of Contents     

    

                                    

Passive AUM by Channel (1)  
As of and for the Three Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
Retail
 
Institutional
June 30, 2017
156.6

 
141.5

 
15.1

Long-term inflows
13.2

 
11.0

 
2.2

Long-term outflows
(10.8
)
 
(10.5
)
 
(0.3
)
Long-term net flows
2.4

 
0.5

 
1.9

Net flows in Invesco PowerShares QQQ fund
(0.2
)
 
(0.2
)
 
—

Net flows in institutional money market funds
—

 
—

 
—

Total net flows
2.2

 
0.3

 
1.9

Market gains and losses
5.7

 
5.6

 
0.1

Acquisitions/dispositions, net
26.0

 
26.0

 
—

Foreign currency translation
—

 
—

 
—

September 30, 2017
190.5

 
173.4

 
17.1

 
 
 
 
 
 
June 30, 2016
133.5

 
117.0

 
16.5

Long-term inflows
11.8

 
10.9

 
0.9

Long-term outflows
(7.9
)
 
(7.7
)
 
(0.2
)
Long-term net flows
3.9

 
3.2

 
0.7

Net flows in Invesco PowerShares QQQ fund
1.1

 
1.1

 
—

Net flows in institutional money market funds
(0.1
)
 
—

 
(0.1
)
Total net flows
4.9

 
4.3

 
0.6

Market gains and losses
4.9

 
4.9

 
—

Acquisitions/dispositions, net
—

 
—

 
—

Foreign currency translation
—

 
—

 
—

September 30, 2016
143.3

 
126.2

 
17.1

As of and for the Nine Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
Retail
 
Institutional
December 31, 2016
144.4

 
128.8

 
15.6

Long-term inflows
33.6

 
29.9

 
3.7

Long-term outflows
(29.3
)
 
(27.3
)
 
(2.0
)
Long-term net flows
4.3

 
2.6

 
1.7

Net flows in Invesco PowerShares QQQ fund
1.0

 
1.0

 
—

Net flows in institutional money market funds
—

 
—

 
—

Total net flows
5.3

 
3.6

 
1.7

Market gains and losses
14.7

 
15.0

 
(0.3
)
Acquisitions/dispositions, net
26.0

 
26.0

 
—

Foreign currency translation
0.1

 
—

 
0.1

September 30, 2017
190.5

 
173.4

 
17.1

 
 
 
 
 
 
December 31, 2015
139.1

 
118.7

 
20.4

Long-term inflows
34.0

 
32.1

 
1.9

Long-term outflows
(27.4
)
 
(25.6
)
 
(1.8
)
Long-term net flows
6.6

 
6.5

 
0.1

Net flows in Invesco PowerShares QQQ fund
(5.3
)
 
(5.3
)
 
—

Net flows in institutional money market funds
(0.3
)
 
—

 
(0.3
)
Total net flows
1.0

 
1.2

 
(0.2
)
Market gains and losses
6.2

 
6.3

 
(0.1
)
Acquisitions/dispositions, net
(3.2
)
 
—

 
(3.2
)
Foreign currency translation
0.2

 
—

 
0.2

September 30, 2016
143.3

 
126.2

 
17.1

____________
See accompanying notes immediately following these AUM tables.

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Table of Contents     

    

                                    

Total AUM by Asset Class (3)  
As of and for the Three Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
Equity
 
Fixed Income (3)
 
Balanced
 
Money Market (4)(6)
 
Alternatives (5)
June 30, 2017
858.3

 
391.2

 
208.9

 
52.2

 
76.1

 
129.9

Long-term inflows (2)
49.4

 
20.8

 
15.0

 
3.2

 
1.3

 
9.1

Long-term outflows
(43.1
)
 
(24.2
)
 
(9.0
)
 
(3.0
)
 
(1.1
)
 
(5.8
)
Long-term net flows
6.3

 
(3.4
)
 
6.0

 
0.2

 
0.2

 
3.3

Net flows in Invesco PowerShares QQQ fund
(0.2
)
 
(0.2
)
 
—

 
—

 
—

 
—

Net flows in institutional money market funds
5.4

 
—

 
—

 
—

 
5.4

 
—

Total net flows
11.5

 
(3.6
)
 
6.0

 
0.2

 
5.6

 
3.3

Market gains and losses (2)
15.0

 
13.1

 
0.9

 
0.6

 
0.1

 
0.3

Transfers/reclassifications
—

 
—

 
—

 
—

 
—

 
—

Acquisitions/dispositions, net
26.0

 
12.2

 
7.8

 
—

 
—

 
6.0

Foreign currency translation
6.7

 
3.3

 
0.9

 
1.2

 
0.1

 
1.2

September 30, 2017
917.5

 
416.2

 
224.5

 
54.2

 
81.9

 
140.7

Average AUM
890.8

 
403.2

 
217.2

 
53.8

 
80.7

 
135.9

% of total average AUM
100.0
%
 
45.3
%
 
24.4
%
 
6.0
%
 
9.1
%
 
15.3
%
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2016
779.6

 
348.8

 
196.3

 
47.4

 
71.1

 
116.0

Long-term inflows (2)
51.7

 
19.9

 
17.1

 
2.6

 
1.2

 
10.9

Long-term outflows
(39.5
)
 
(23.1
)
 
(7.9
)
 
(2.4
)
 
(1.1
)
 
(5.0
)
Long-term net flows
12.2

 
(3.2
)
 
9.2

 
0.2

 
0.1

 
5.9

Net flows in Invesco PowerShares QQQ fund
1.1

 
1.1

 
—

 
—

 
—

 
—

Net flows in institutional money market funds
5.9

 
—

 
—

 
—

 
5.9

 
—

Total net flows
19.2

 
(2.1
)
 
9.2

 
0.2

 
6.0

 
5.9

Market gains and losses (2)
23.6

 
20.0

 
1.9

 
1.5

 
0.1

 
0.1

Acquisitions/dispositions, net
—

 
—

 
—

 
—

 
—

 
—

Foreign currency translation
(2.2
)
 
(1.4
)
 
(0.4
)
 
(0.2
)
 
—

 
(0.2
)
September 30, 2016
820.2

 
365.3

 
207.0

 
48.9

 
77.2

 
121.8

Average AUM
814.1

 
364.4

 
203.8

 
48.4

 
78.1

 
119.4

% of total average AUM
100.0
%
 
44.8
%
 
25.0
%
 
5.9
%
 
9.6
%
 
14.7
%

47

Table of Contents     

    

                                    

As of and for the Nine Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
Equity
 
Fixed Income (3)
 
Balanced
 
Money Market (4)(6)
 
Alternatives (5)
December 31, 2016
812.9

 
364.1

 
201.7

 
46.8

 
78.3

 
122.0

Long-term inflows (2)
140.8

 
61.3

 
38.6

 
9.5

 
3.1

 
28.3

Long-term outflows
(133.3
)
 
(75.3
)
 
(28.0
)
 
(7.3
)
 
(2.9
)
 
(19.8
)
Long-term net flows
7.5

 
(14.0
)
 
10.6

 
2.2

 
0.2

 
8.5

Net flows in Invesco PowerShares QQQ fund
1.0

 
1.0

 
—

 
—

 
—

 
—

Net flows in institutional money market funds
0.1

 
—

 
—

 
—

 
0.1

 
—

Total net flows
8.6

 
(13.0
)
 
10.6

 
2.2

 
0.3

 
8.5

Market gains and losses (2)
51.1

 
44.2

 
4.6

 
2.1

 
0.1

 
0.1

Transfers/reclassifications
—

 
—

 
(3.0
)
 
—

 
3.0

 
—

Acquisitions/dispositions, net
26.0

 
12.2

 
7.8

 
—

 
—

 
6.0

Foreign currency translation
18.9

 
8.7

 
2.8

 
3.1

 
0.2

 
4.1

September 30, 2017
917.5

 
416.2

 
224.5

 
54.2

 
81.9

 
140.7

Average AUM
856.6

 
389.6

 
208.9

 
50.9

 
77.3

 
129.9

% of total average AUM
100.0
%
 
45.5
%
 
24.4
%
 
5.9
%
 
9.0
%
 
15.2
%
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
775.6

 
370.9

 
187.9

 
48.1

 
64.6

 
104.1

Long-term inflows (2)
140.3

 
60.8

 
38.8

 
7.8

 
3.2

 
29.7

Long-term outflows
(124.9
)
 
(74.7
)
 
(24.4
)
 
(9.0
)
 
(2.9
)
 
(13.9
)
Long-term net flows
15.4

 
(13.9
)
 
14.4

 
(1.2
)
 
0.3

 
15.8

Net flows in Invesco PowerShares QQQ fund
(5.3
)
 
(5.3
)
 
—

 
—

 
—

 
—

Net flows in institutional money market funds
11.7

 
—

 
—

 
—

 
11.7

 
—

Total net flows
21.8

 
(19.2
)
 
14.4

 
(1.2
)
 
12.0

 
15.8

Market gains and losses (2)
31.3

 
18.0

 
7.3

 
2.5

 
0.3

 
3.2

Acquisitions/dispositions, net
(1.2
)
 
0.4

 
(1.1
)
 
—

 
0.4

 
(0.9
)
Foreign currency translation
(7.3
)
 
(4.8
)
 
(1.5
)
 
(0.5
)
 
(0.1
)
 
(0.4
)
September 30, 2016
820.2

 
365.3

 
207.0

 
48.9

 
77.2

 
121.8

Average AUM
782.0

 
355.3

 
194.3

 
47.3

 
72.6

 
112.5

% of total average AUM
100.0
%
 
45.4
%
 
24.8
%
 
6.0
%
 
9.3
%
 
14.4
%
____________
See accompanying notes immediately following these AUM tables.


 

48

Table of Contents     

    

                                    

Passive AUM by Asset Class (3)  
As of and for the Three Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
Equity
 
Fixed Income
 
Balanced
 
Money Market
 
Alternatives (5)
June 30, 2017
156.6

 
103.5

 
46.5

 
—

 
—

 
6.6

Long-term inflows
13.2

 
6.8

 
5.2

 
—

 
—

 
1.2

Long-term outflows
(10.8
)
 
(8.0
)
 
(2.2
)
 
—

 
—

 
(0.6
)
Long-term net flows
2.4

 
(1.2
)
 
3.0

 
—

 
—

 
0.6

Net flows in Invesco PowerShares QQQ fund
(0.2
)
 
(0.2
)
 
—

 
—

 
—

 
—

Net flows in institutional money market funds
—

 
—

 
—

 
—

 
—

 
—

Total net flows
2.2

 
(1.4
)
 
3.0

 
—

 
—

 
0.6

Market gains and losses
5.7

 
5.5

 
0.1

 
—

 
—

 
0.1

Acquisitions/dispositions, net
26.0

 
12.2

 
7.8

 
—

 
—

 
6.0

Foreign currency translation
—

 
—

 
—

 
—

 
—

 
—

September 30, 2017
190.5

 
119.8

 
57.4

 
—

 
—

 
13.3

Average AUM
173.8

 
112.2

 
51.9

 
—

 
—

 
9.7

% of total average AUM
100.0
%
 
64.6
%
 
29.9
%
 
—
%
 
—
%
 
5.6
%
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2016
133.5

 
84.9

 
38.9

 
—

 
0.2

 
9.5

Long-term inflows
11.8

 
6.9

 
4.1

 
—

 
—

 
0.8

Long-term outflows
(7.9
)
 
(6.2
)
 
(0.7
)
 
—

 
—

 
(1.0
)
Long-term net flows
3.9

 
0.7

 
3.4

 
—

 
—

 
(0.2
)
Net flows in Invesco PowerShares QQQ fund
1.1

 
1.1

 
—

 
—

 
—

 
—

Net flows in institutional money market funds
(0.1
)
 
—

 
—

 
—

 
(0.1
)
 
—

Total net flows
4.9

 
1.8

 
3.4

 
—

 
(0.1
)
 
(0.2
)
Market gains and losses
4.9

 
4.9

 
0.1

 
—

 
—

 
(0.1
)
Acquisitions/dispositions, net
—

 
—

 
—

 
—

 
—

 
—

Foreign currency translation
—

 
—

 
—

 
—

 
—

 
—

September 30, 2016
143.3

 
91.6

 
42.4

 
—

 
0.1

 
9.2

Average AUM
141.0

 
90.8

 
40.7

 
—

 
0.1

 
9.4

% of total average AUM
100.0
%
 
64.4
%
 
28.9
%
 
—
%
 
0.1
%
 
6.7
%

49

Table of Contents     

    

                                    

As of and for the Nine Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
Equity
 
Fixed Income
 
Balanced
 
Money Market
 
Alternatives (5)
December 31, 2016
144.4

 
93.5

 
41.7

 
—

 
—

 
9.2

Long-term inflows
33.6

 
19.3

 
12.0

 
—

 
—

 
2.3

Long-term outflows
(29.3
)
 
(21.1
)
 
(4.5
)
 
—

 
—

 
(3.7
)
Long-term net flows
4.3

 
(1.8
)
 
7.5

 
—

 
—

 
(1.4
)
Net flows in Invesco PowerShares QQQ fund
1.0

 
1.0

 
—

 
—

 
—

 
—

Net flows in institutional money market funds
—

 
—

 
—

 
—

 
—

 
—

Total net flows
5.3

 
(0.8
)
 
7.5

 
—

 
—

 
(1.4
)
Market gains and losses
14.7

 
14.9

 
0.4

 
—

 
—

 
(0.6
)
Acquisitions/dispositions, net
26.0

 
12.2

 
7.8

 
—

 
—

 
6.0

Foreign currency translation
0.1

 
—

 
—

 
—

 
—

 
0.1

September 30, 2017
190.5

 
119.8

 
57.4

 
—

 
—

 
13.3

Average AUM
160.7

 
104.5

 
47.6

 
—

 
—

 
8.6

% of total average AUM
100.0
%
 
65.0
%
 
29.6
%
 
—
%
 
—
%
 
5.4
%
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
139.1

 
91.0

 
38.6

 
—

 
0.4

 
9.1

Long-term inflows
34.0

 
21.7

 
9.7

 
—

 
—

 
2.6

Long-term outflows
(27.4
)
 
(21.0
)
 
(4.0
)
 
—

 
—

 
(2.4
)
Long-term net flows
6.6

 
0.7

 
5.7

 
—

 
—

 
0.2

Net flows in Invesco PowerShares QQQ fund
(5.3
)
 
(5.3
)
 
—

 
—

 
—

 
—

Net flows in institutional money market funds
(0.3
)
 
—

 
—

 
—

 
(0.3
)
 
—

Total net flows
1.0

 
(4.6
)
 
5.7

 
—

 
(0.3
)
 
0.2

Market gains and losses
6.2

 
5.2

 
0.8

 
—

 
—

 
0.2

Acquisitions/dispositions, net
(3.2
)
 
—

 
(2.7
)
 
—

 
—

 
(0.5
)
Foreign currency translation
0.2

 
—

 
—

 
—

 
—

 
0.2

September 30, 2016
143.3

 
91.6

 
42.4

 
—

 
0.1

 
9.2

Average AUM
133.2

 
86.3

 
37.9

 
—

 
0.1

 
8.9

% of total average AUM
100.0
%
 
64.8
%
 
28.5
%
 
—
%
 
0.1
%
 
6.7
%
____________
See accompanying notes immediately following these AUM tables.





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Total AUM by Client Domicile (7)  
As of and for the Three Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
U.S.
 
Canada
 
U.K.
 
Continental Europe
 
Asia
June 30, 2017
858.3

 
559.2

 
24.8

 
103.8

 
86.6

 
83.9

Long-term inflows (2)
49.4

 
25.0

 
1.0

 
4.3

 
13.8

 
5.3

Long-term outflows
(43.1
)
 
(23.1
)
 
(1.1
)
 
(3.2
)
 
(10.5
)
 
(5.2
)
Long-term net flows
6.3

 
1.9

 
(0.1
)
 
1.1

 
3.3

 
0.1

Net flows in Invesco PowerShares QQQ fund
(0.2
)
 
(0.2
)
 
—

 
—

 
—

 
—

Net flows in institutional money market funds
5.4

 
4.9

 
—

 
0.3

 
0.2

 
—

Total net flows
11.5

 
6.6

 
(0.1
)
 
1.4

 
3.5

 
0.1

Market gains and losses (2)
15.0

 
12.2

 
0.1

 
(0.2
)
 
2.3

 
0.6

Acquisitions/dispositions, net
26.0

 
—

 
—

 
—

 
26.0

 
—

Foreign currency translation
6.7

 
—

 
1.0

 
3.0

 
2.3

 
0.4

September 30, 2017
917.5

 
578.0

 
25.8

 
108.0

 
120.7

 
85.0

 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2016
779.6

 
512.5

 
23.1

 
93.8

 
72.8

 
77.4

Long-term inflows (2)
51.7

 
32.5

 
0.8

 
4.1

 
6.0

 
8.3

Long-term outflows
(39.5
)
 
(24.5
)
 
(1.0
)
 
(3.6
)
 
(6.3
)
 
(4.1
)
Long-term net flows
12.2

 
8.0

 
(0.2
)
 
0.5

 
(0.3
)
 
4.2

Net flows in Invesco PowerShares QQQ fund
1.1

 
1.1

 
—

 
—

 
—

 
—

Net flows in institutional money market funds
5.9

 
1.7

 
—

 
4.1

 
—

 
0.1

Total net flows
19.2

 
10.8

 
(0.2
)
 
4.6

 
(0.3
)
 
4.3

Market gains and losses (2)
23.6

 
13.9

 
1.3

 
4.9

 
2.5

 
1.0

Acquisitions/dispositions, net
—

 
—

 
—

 
—

 
—

 
—

Foreign currency translation
(2.2
)
 
—

 
(0.3
)
 
(2.6
)
 
0.5

 
0.2

September 30, 2016
820.2

 
537.2

 
23.9

 
100.7

 
75.5

 
82.9

As of and for the Nine Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
U.S.
 
Canada
 
U.K.
 
Continental Europe
 
Asia
December 31, 2016
812.9

 
539.5

 
23.1

 
98.2

 
72.1

 
80.0

Long-term inflows (2)
140.8

 
75.3

 
3.2

 
12.4

 
31.9

 
18.0

Long-term outflows
(133.3
)
 
(75.3
)
 
(3.4
)
 
(14.2
)
 
(22.9
)
 
(17.5
)
Long-term net flows
7.5

 
—

 
(0.2
)
 
(1.8
)
 
9.0

 
0.5

Net flows in Invesco PowerShares QQQ fund
1.0

 
1.0

 
—

 
—

 
—

 
—

Net flows in institutional money market funds
0.1

 
1.3

 
—

 
(1.2
)
 
0.7

 
(0.7
)
Total net flows
8.6

 
2.3

 
(0.2
)
 
(3.0
)
 
9.7

 
(0.2
)
Market gains and losses (2)
51.1

 
36.1

 
1.1

 
5.3

 
6.1

 
2.5

Acquisitions/dispositions, net
26.0

 
—

 
—

 
—

 
26.0

 
—

Foreign currency translation
18.9

 
0.1

 
1.8

 
7.5

 
6.8

 
2.7

September 30, 2017
917.5

 
578.0

 
25.8

 
108.0

 
120.7

 
85.0

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
775.6

 
510.7

 
21.7

 
104.2

 
75.4

 
63.6

Long-term inflows (2)
140.3

 
84.6

 
2.6

 
11.5

 
18.7

 
22.9

Long-term outflows
(124.9
)
 
(76.8
)
 
(3.2
)
 
(12.4
)
 
(21.5
)
 
(11.0
)
Long-term net flows
15.4

 
7.8

 
(0.6
)
 
(0.9
)
 
(2.8
)
 
11.9

Net flows in Invesco PowerShares QQQ fund
(5.3
)
 
(5.3
)
 
—

 
—

 
—

 
—

Net flows in institutional money market funds
11.7

 
5.6

 
0.4

 
3.3

 
—

 
2.4

Total net flows
21.8

 
8.1

 
(0.2
)
 
2.4

 
(2.8
)
 
14.3

Market gains and losses (2)
31.3

 
22.1

 
1.2

 
5.6

 
1.5

 
0.9

Acquisitions/dispositions, net
(1.2
)
 
(3.6
)
 
—

 
—

 
—

 
2.4

Foreign currency translation
(7.3
)
 
(0.1
)
 
1.2

 
(11.5
)
 
1.4

 
1.7

September 30, 2016
820.2

 
537.2

 
23.9

 
100.7

 
75.5

 
82.9

____________
See accompanying notes immediately following these AUM tables.

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Passive AUM by Client Domicile (7)  
As of and for the Three Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
U.S.
 
Canada
 
U.K.
 
Continental Europe
 
Asia
June 30, 2017
156.6

 
152.8

 
0.6

 
—

 
2.1

 
1.1

Long-term inflows
13.2

 
9.4

 
0.1

 
—

 
3.7

 
—

Long-term outflows
(10.8
)
 
(7.3
)
 
(0.1
)
 
—

 
(3.4
)
 
—

Long-term net flows
2.4

 
2.1

 
—

 
—

 
0.3

 
—

Net flows in Invesco PowerShares QQQ fund
(0.2
)
 
(0.2
)
 
—

 
—

 
—

 
—

Net flows in institutional money market funds
—

 
—

 
—

 
—

 
—

 
—

Total net flows
2.2

 
1.9

 
—

 
—

 
0.3

 
—

Market gains and losses
5.7

 
5.1

 
—

 
—

 
0.6

 
—

Acquisitions/dispositions, net
26.0

 
—

 
—

 
—

 
26.0

 
—

Foreign currency translation
—

 
—

 
—

 
—

 
—

 
—

September 30, 2017
190.5

 
159.8

 
0.6

 
—

 
29.0

 
1.1

 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2016
133.5

 
128.9

 
0.5

 
—

 
1.7

 
2.4

Long-term inflows
11.8

 
11.6

 
0.1

 
—

 
0.1

 
—

Long-term outflows
(7.9
)
 
(7.7
)
 
(0.1
)
 
—

 
(0.1
)
 
—

Long-term net flows
3.9

 
3.9

 
—

 
—

 
—

 
—

Net flows in Invesco PowerShares QQQ fund
1.1

 
1.1

 
—

 
—

 
—

 
—

Net flows in institutional money market funds
(0.1
)
 
—

 
—

 
—

 
—

 
(0.1
)
Total net flows
4.9

 
5.0

 
—

 
—

 
—

 
(0.1
)
Market gains and losses
4.9

 
4.7

 
—

 
—

 
0.2

 
—

Acquisitions/dispositions, net
—

 
—

 
—

 
—

 
—

 
—

Foreign currency translation
—

 
—

 
—

 
—

 
—

 
—

September 30, 2016
143.3

 
138.6

 
0.5

 
—

 
1.9

 
2.3

As of and for the Nine Months Ended September 30, 2017 and 2016 :
$ in billions
Total
 
U.S.
 
Canada
 
U.K.
 
Continental Europe
 
Asia
December 31, 2016
144.4

 
139.9

 
0.5

 
—

 
1.9

 
2.1

Long-term inflows
33.6

 
29.3

 
0.2

 
—

 
4.1

 
—

Long-term outflows
(29.3
)
 
(24.2
)
 
(0.1
)
 
—

 
(3.8
)
 
(1.2
)
Long-term net flows
4.3

 
5.1

 
0.1

 
—

 
0.3

 
(1.2
)
Net flows in Invesco PowerShares QQQ fund
1.0

 
1.0

 
—

 
—

 
—

 
—

Net flows in institutional money market funds
—

 
—

 
—

 
—

 
—

 
—

Total net flows
5.3

 
6.1

 
0.1

 
—

 
0.3

 
(1.2
)
Market gains and losses
14.7

 
13.8

 
—

 
—

 
0.8

 
0.1

Acquisitions/dispositions, net
26.0

 
—

 
—

 
—

 
26.0

 
—

Foreign currency translation
0.1

 
—

 
—

 
—

 
—

 
0.1

September 30, 2017
190.5

 
159.8

 
0.6

 
—

 
29.0

 
1.1

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
139.1

 
134.4

 
0.4

 
—

 
1.9

 
2.4

Long-term inflows
34.0

 
33.4

 
0.3

 
—

 
0.3

 
—

Long-term outflows
(27.4
)
 
(26.7
)
 
(0.2
)
 
—

 
(0.5
)
 
—

Long-term net flows
6.6

 
6.7

 
0.1

 
—

 
(0.2
)
 
—

Net flows in Invesco PowerShares QQQ fund
(5.3
)
 
(5.3
)
 
—

 
—

 
—

 
—

Net flows in institutional money market funds
(0.3
)
 
—

 
—

 
—

 
—

 
(0.3
)
Total net flows
1.0

 
1.4

 
0.1

 
—

 
(0.2
)
 
(0.3
)
Market gains and losses
6.2

 
6.0

 
—

 
—

 
0.2

 
—

Acquisitions/dispositions, net
(3.2
)
 
(3.2
)
 
—

 
—

 
—

 
—

Foreign currency translation
0.2

 
—

 
—

 
—

 
—

 
0.2

September 30, 2016
143.3

 
138.6

 
0.5

 
—

 
1.9

 
2.3


52

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____________
(1)
Channel refers to the internal distribution channel from which the AUM originated. Retail AUM represents AUM distributed by the company's retail sales team. Institutional AUM represents AUM distributed by our institutional sales team. This aggregation is viewed as a proxy for presenting AUM in the retail and institutional markets in which the company operates.
(2)
For the three months ended September 30, 2017, reinvested dividends and capital gains of $1.1 billion are included in long-term inflows. For previous periods, reinvested dividends and capital gains are included in market gains and losses.
(3)
Asset classes are descriptive groupings of AUM by common type of underlying investments.
(4)
During January 2017, the company reclassified certain AUM previously classified in fixed income to money market totaling $3.0 billion.
(5)
There have been no significant changes to the managed objectives under the Alternatives asset class, which are disclosed in our most recent Form 10-K for the year ended December 31, 2016 .
(6) Ending Money Market AUM includes $77.1 billion in institutional money market AUM.
(7)
Client domicile disclosure groups AUM by the domicile of the underlying clients.

 


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Results of Operations for the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016
The discussion below includes the use of non-GAAP financial measures. See “Schedule of Non-GAAP Information” for additional details and reconciliations of the most directly comparable U.S. GAAP measures to the non-GAAP measures. The third quarter includes the results of Source from the date of acquisition, August 18, 2017.
Operating Revenues and Net Revenues
The main categories of revenues, and the dollar and percentage change between the periods, are as follows:
 
 
 
 
 
Variance
 
 
 
 
 
Variance
 
Three months ended September 30,
 
2017 vs 2016
 
Nine months ended September 30,
 
2017 vs 2016
$ in millions
2017
 
2016
 
$ Change
 
% Change
 
2017
 
2016
 
$ Change
 
% Change
Investment management fees
1,062.3

 
965.9

 
96.4

 
10.0
 %
 
3,027.9

 
2,826.2

 
201.7

 
7.1
 %
Service and distribution fees
217.6

 
213.4

 
4.2

 
2.0
 %
 
635.3

 
614.5

 
20.8

 
3.4
 %
Performance fees
42.3

 
3.4

 
38.9

 
1,144.1
 %
 
70.3

 
26.8

 
43.5

 
162.3
 %
Other
15.5

 
18.9

 
(3.4
)
 
(18.0
)%
 
51.2

 
72.2

 
(21.0
)
 
(29.1
)%
Total operating revenues
1,337.7

 
1,201.6

 
136.1

 
11.3
 %
 
3,784.7

 
3,539.7

 
245.0

 
6.9
 %
Third-party distribution, service and advisory expenses
(380.4
)
 
(362.1
)
 
(18.3
)
 
5.1
 %
 
(1,095.6
)
 
(1,057.7
)
 
(37.9
)
 
3.6
 %
Proportional share of revenues, net of third-party distribution expenses, from joint venture investments
13.1

 
9.5

 
3.6

 
37.9
 %
 
35.2

 
31.1

 
4.1

 
13.2
 %
CIP
6.2

 
5.7

 
0.5

 
8.8
 %
 
25.7

 
16.3

 
9.4

 
57.7
 %
Net revenues
976.6

 
854.7

 
121.9

 
14.3
 %
 
2,750.0

 
2,529.4

 
220.6

 
8.7
 %
Net revenues are operating revenues less third-party distribution, service and advisory expenses, plus our proportional share of net revenues from joint venture arrangements, plus management and performance fees earned from CIP. See "Schedule of Non-GAAP Information" for additional important disclosures regarding the use of net revenues.
The impact of foreign exchange rate movements increased operating revenues by $5.0 million , equivalent to 0.4% of total operating revenues, during the three months ended September 30, 2017 when compared to the three months ended September 30, 2016 . The impact of foreign exchange rate movements decreased operating revenues by $67.3 million , equivalent to 1.8% of total operating revenues, during the nine months ended September 30, 2017 when compared to the nine months ended September 30, 2016 .
Additionally, our revenues are directly influenced by the level and composition of our AUM. Therefore, movements in global capital market levels, net new business inflows (or outflows) and changes in the mix of investment products between asset classes and geographies may materially affect our revenues from period to period. As discussed in the Executive Overview, returns from most capital markets were positive in the three and nine months ended September 30, 2017 .
Investment Management Fees
Investment management fees increased by $96.4 million ( 10.0% ) in the three months ended September 30, 2017 , to $1,062.3 million ( three months ended September 30, 2016 : $965.9 million ). This compares to an 9.4% increase in average AUM. The impact of foreign exchange rate movements increased investment management fees by $4.6 million during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . After allowing for foreign exchange movements, investment management fees increased by $91.8 million ( 9.5% ). The third quarter of 2017 also includes incremental management fees from the acquisition of Source.
Investment management fees increased by $201.7 million ( 7.1% ) in the nine months ended September 30, 2017 , to $3,027.9 million ( nine months ended September 30, 2016 : $2,826.2 million ). This compares to a 9.5% increase in average AUM. The impact of foreign exchange rate movements decreased investment management fees by $66.3 million during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . After allowing for foreign exchange movements, investment management fees increased by $268.0 million ( 9.5% ).
In addition to foreign exchange movements, the change in product mix of AUM results in changes in the average revenue yield derived from AUM due to differing fee rates and structures, which impacts our management fees. See the company's

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disclosures regarding the changes in AUM and revenue yields during the three and nine months ended September 30, 2017 in the “Assets Under Management” section above for additional information regarding the impact of changes in AUM on management fee yields.
Service and Distribution Fees
In the three months ended September 30, 2017 , service and distribution fees increased by $4.2 million ( 2.0% ) to $217.6 million ( three months ended September 30, 2016 : $213.4 million ). The impact of foreign exchange rate movements increased service and distribution fees by $0.3 million during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . In the nine months ended September 30, 2017 , service and distribution fees increased by $20.8 million ( 3.4% ) to $635.3 million ( nine months ended September 30, 2016 : $614.5 million ). Foreign exchange rate movements increased service and distribution fees by $0.2 million during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . In both periods, the increase results from increases in AUM to which these fees apply.
Performance Fees
Of our $917.5 billion in AUM at September 30, 2017 , approximately $46.1 billion or 5.0% , could potentially earn performance fees , including carried interests and performance fees related to partnership investments and separate accounts. 
In the three months ended September 30, 2017 , performance fees increased by $38.9 million ( 1,144.1% ) to $42.3 million when compared to the performance fees in the three months ended September 30, 2016 of $3.4 million . Performance fees during the third quarter of 2017 were primarily generated by Invesco’s Mortgage Recovery Fund.
In the nine months ended September 30, 2017 , performance fees increased by $43.5 million ( 162.3% ) to $70.3 million when compared to the performance fees in the nine months ended September 30, 2016 of $26.8 million . The impact of foreign exchange rate movements decreased performance fees by $0.9 million during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . Performance fees during the nine months ended September 30, 2017 included $36.8 million from Invesco’s Mortgage Recovery Fund. In addition we recognized $6.7 million from the bank loan group, $6.5 million from private equity, $5.7 million from real estate, $9.8 million from the U.K. and $2.4 million from Asia-Pacific.
Other Revenues
In the three months ended September 30, 2017 , other revenues decreased by $3.4 million ( 18.0% ) to $15.5 million ( three months ended September 30, 2016 : $18.9 million ). The impact of foreign exchange rate movements increased other revenues by $0.1 million during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . After allowing for foreign exchange rate changes, the decrease in other revenues was $3.5 million . The decrease in other revenues during the three months ended September 30, 2017 compared to the three months ended September 30, 2016 relates primarily to decreases in front end fees of $4.2 million offset by increase in in real estate transaction fees of $1.0 million.
In the nine months ended September 30, 2017 , other revenues decreased by $21.0 million ( 29.1% ) to $51.2 million ( nine months ended September 30, 2016 : $72.2 million ). The impact of foreign exchange rate movements decreased other revenues by $0.3 million during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . After allowing for foreign exchange rate changes, the decrease in other revenues was $20.7 million . The decrease in other revenues during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 relates primarily to decreases in front end fees of $15.1 million and real estate transaction fees of $4.2 million.
Third-Party Distribution, Service and Advisory Expenses
Third-party distribution, service and advisory expenses increased by $18.3 million ( 5.1% ) in the three months ended September 30, 2017 to $380.4 million ( three months ended September 30, 2016 : $362.1 million ). The impact of foreign exchange rate movements increased third-party distribution, service and advisory expenses by $1.2 million during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . After allowing for foreign exchange rate changes, the increase in third-party distribution, service and advisory expenses was $17.1 million . Increases in third-party distribution, service and advisory expenses in the three months ended September 30, 2017 included renewal commission increases of $13.9 million, increases in fund expenses of $3.0 million, increases in rebates of $2.1 million offset by a decrease in service fees of $2.7 million. These increases in third-party distribution, service and advisory expenses are in line with the increases in related AUM.

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Third-party distribution, service and advisory expenses increased by $37.9 million ( 3.6% ) in the nine months ended September 30, 2017 to $1,095.6 million ( nine months ended September 30, 2016 : $1,057.7 million ). The impact of foreign exchange rate movements decreased third-party distribution, service and advisory expenses by $12.1 million during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . After allowing for foreign exchange rate changes, the increase in third-party distribution, service and advisory expenses was $50.0 million . Increases in third-party distribution, service and advisory expenses in the nine months ended September 30, 2017 as compared to the same periods in 2016 reflects the changes in related AUM. Increases in renewal commission of $20.6 million, asset and sales based fees of $18.4 million, service fees increases of $12.4 million and fund expenses increases of $3.5 million were partially offset by decreases in rebates of $2.4 million and other transaction fees of $3.6 million.
Proportional share of revenues, net of third-party distribution expenses, from joint venture investments
Management believes that the addition of our proportional share of revenues, net of third-party distribution expenses, from joint venture arrangements should be added to operating revenues to arrive at net revenues, as it is important to evaluate the contribution to the business that our joint venture arrangements are making. See “Schedule of Non-GAAP Information” for additional disclosures regarding the use of net revenues. The company's most significant joint venture arrangement is our 49% investment in Invesco Great Wall Fund Management Company Limited (the “Invesco Great Wall” joint venture).
Our proportional share of revenues, net of third-party distribution expenses, from joint venture investments increased by $3.6 million ( 37.9% ) to $13.1 million for the three months ended September 30, 2017 ( three months ended September 30, 2016 : $9.5 million ). Our share of the Invesco Great Wall joint venture's average AUM for the three months ended September 30, 2017 was $8.6 billion compared to $10.4 billion for the three months ended September 30, 2016 . Our proportional share of revenues, net of third-party distribution expenses, from joint venture investments increased by $4.1 million ( 13.2% ) to $35.2 million for the nine months ended September 30, 2017 ( nine months ended September 30, 2016 : $31.1 million ). Our share of the Invesco Great Wall joint venture's average AUM for the nine months ended September 30, 2017 was $8.3 billion compared to $8.9 billion for the nine months ended September 30, 2016 . For both periods, the increase in our proportional share of revenues, net of third party distribution expenses, from joint venture investments relates primarily to increased management fees and performance fees in 2017 than in the comparable 2016 periods.
Management, performance and other fees earned from CIP
Management believes that the consolidation of investment products may impact a reader's analysis of our underlying results of operations and could result in investor confusion or the production of information about the company by analysts or external credit rating agencies that is not reflective of the underlying results of operations and financial condition of the company. Accordingly, management believes that it is appropriate to adjust operating revenues for the impact of CIP in calculating net revenues. As management and performance fees earned by Invesco from the consolidated products are eliminated upon consolidation of the investment products, management believes that it is appropriate to add these operating revenues back in the calculation of net revenues. See “Schedule of Non-GAAP Information” for additional disclosures regarding the use of net revenues.
The elimination of management and performance fees earned from CIP was $6.2 million in the three months ended September 30, 2017 ( three months ended September 30, 2016 : $5.7 million ). The increase is primarily due to the increase in management fees earned from CLOs.
The elimination of management and performance fees earned from CIP was $25.7 million in the nine months ended September 30, 2017 ( nine months ended September 30, 2016 : $16.3 million ). The increase is primarily due to the increase in performance fees earned from CLOs.

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Operating Expenses
The main categories of operating expenses, and the dollar and percentage changes between periods, are as follows:
 
 
 
 
 
Variance
 
 
 
 
 
Variance
 
Three months ended September 30,
 
2017 vs 2016
 
Nine months ended September 30, 2016
 
2017 vs 2016
$ in millions
2017
 
2016
 
$ Change
 
% Change
 
2017
 
2016
 
$ Change
 
% Change
Third-party distribution, service and advisory
380.4

 
362.1

 
18.3

 
5.1
%
 
1,095.6

 
1,057.7

 
37.9

 
3.6
%
Employee compensation
393.1

 
345.1

 
48.0

 
13.9
%
 
1,155.5

 
1,039.8

 
115.7

 
11.1
%
Marketing
29.5

 
26.4

 
3.1

 
11.7
%
 
83.0

 
79.6

 
3.4

 
4.3
%
Property, office and technology
92.8

 
78.2

 
14.6

 
18.7
%
 
267.3

 
240.4

 
26.9

 
11.2
%
General and administrative
86.6

 
83.5

 
3.1

 
3.7
%
 
250.5

 
240.0

 
10.5

 
4.4
%
Total operating expenses
982.4

 
895.3

 
87.1

 
9.7
%
 
2,851.9

 
2,657.5

 
194.4

 
7.3
%
The tables below set forth these expense categories as a percentage of total operating expenses and operating revenues, which we believe provides useful information as to the relative significance of each type of expense.
$ in millions
Three months ended September 30, 2017
 
% of Total Operating Expenses
 
% of Operating Revenues
 
Three months ended September 30, 2016
 
% of Total Operating Expenses
 
% of Operating Revenues
Third-party distribution, service and advisory
380.4

 
38.7
%
 
28.4
%
 
362.1

 
40.5
%
 
30.1
%
Employee compensation
393.1

 
40.0
%
 
29.4
%
 
345.1

 
38.6
%
 
28.7
%
Marketing
29.5

 
3.0
%
 
2.2
%
 
26.4

 
2.9
%
 
2.2
%
Property, office and technology
92.8

 
9.4
%
 
6.9
%
 
78.2

 
8.7
%
 
6.5
%
General and administrative
86.6

 
8.8
%
 
6.5
%
 
83.5

 
9.3
%
 
7.0
%
Total operating expenses
982.4

 
100.0
%
 
73.4
%
 
895.3

 
100.0
%
 
74.5
%
$ in millions
Nine months ended September 30, 2017
 
% of Total Operating Expenses
 
% of Operating Revenues
 
Nine months ended September 30, 2016
 
% of Total Operating Expenses
 
% of Operating Revenues
Third-party distribution, service and advisory
1,095.6

 
38.4
%
 
28.9
%
 
1,057.7

 
39.8
%
 
29.9
%
Employee compensation
1,155.5

 
40.5
%
 
30.5
%
 
1,039.8

 
39.1
%
 
29.4
%
Marketing
83.0

 
2.9
%
 
2.2
%
 
79.6

 
3.0
%
 
2.2
%
Property, office and technology
267.3

 
9.4
%
 
7.1
%
 
240.4

 
9.1
%
 
6.8
%
General and administrative
250.5

 
8.8
%
 
6.6
%
 
240.0

 
9.0
%
 
6.8
%
Total operating expenses
2,851.9

 
100.0
%
 
75.4
%
 
2,657.5

 
100.0
%
 
75.1
%
During the three months ended September 30, 2017 , operating expenses increased by $87.1 million ( 9.7% ) to $982.4 million ( three months ended September 30, 2016 : $895.3 million ). The impact of foreign exchange rate movements increased operating expenses by $3.6 million , or 0.4% of total operating expenses, during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 .
During the nine months ended September 30, 2017 , operating expenses increased by $194.4 million ( 7.3% ) to $2,851.9 million ( nine months ended September 30, 2016 : $2,657.5 million ). The impact of foreign exchange rate movements decreased operating expenses by $40.1 million , or 1.4% of total operating expenses, during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 .
Third-Party Distribution, Service and Advisory Expenses
Third-party distribution, service and advisory expenses are discussed above in the operating and net revenues section.
Employee Compensation
Employee compensation increased $48.0 million ( 13.9% ) to $393.1 million in the  three months ended   September 30, 2017 ( three months ended   September 30, 2016 : $345.1 million ). The impact of foreign exchange rate movements increased employee

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compensation by $1.6 million during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . After allowing for foreign exchange rate changes, the increase in employee compensation was $46.4 million .
Employee compensation during the three months ended September 30, 2017 reflects higher variable compensation primarily related to performance fees. Employee compensation costs include a $5.5 million charge related to the partial settlement of a U.K. pension plan. The increase in the third quarter also includes the impact of new headcount from the Source acquisition as well as increased benefit costs. Staff severance costs related to business optimization were $7.6 million in the three months ended September 30, 2017 ( three months ended   September 30, 2016 : $5.8 million ).
Employee compensation increased $115.7 million ( 11.1% ) to $1,155.5 million in the  nine months ended   September 30, 2017 ( nine months ended   September 30, 2016 : $1,039.8 million ). The impact of foreign exchange rate movements decreased employee compensation by $16.9 million during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . After allowing for foreign exchange rate changes, the increase in employee compensation was $132.6 million .
Employee compensation during the nine months ended   September 30, 2017 includes $27.2 million of staff severance costs associated with the business optimization initiative and $18.3 million in deferred compensation costs related to accelerated vesting for multiple senior executive retirements ( nine months ended   September 30, 2016 : $14.2 million and none , respectively). Increases in compensation expense as compared to the nine months ended September 30, 2016 also included a $5.5 million charge related to the partial settlement of a U.K. pension plan, an increase of $29.9 million in variable bonus expenses related to performance fees and company performance, an increase of $18.9 million in base salaries driven by increased headcount and annual raises, an increase of $23.4 million in benefit costs and payroll taxes and an increase of $3.6 million in sales incentives and commissions.
Headcount at September 30, 2017 was 6,994 ( September 30, 2016 : 6,812 ). The increase in headcount is primarily related to the Source acquisition and growth in our shared service centers.
Marketing
Marketing expenses increased by $3.1 million ( 11.7% ) in the three months ended September 30, 2017 to $29.5 million ( three months ended September 30, 2016 : $26.4 million ). The impact of foreign exchange rate movements increased marketing expenses by $0.2 million during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . After allowing for foreign exchange rate changes, the increase in marketing expenses was $2.9 million .
Marketing expenses increased by $3.4 million ( 4.3% ) in the nine months ended September 30, 2017 to $83.0 million ( nine months ended September 30, 2016 : $79.6 million ). The impact of foreign exchange rate movements decreased marketing expenses by $1.4 million during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . After allowing for foreign exchange rate changes, the increase in marketing expenses was $4.8 million .
Property, Office and Technology
Property, office and technology costs increased by $14.6 million ( 18.7% ) to $92.8 million in the three months ended September 30, 2017 ( three months ended September 30, 2016 : $78.2 million ). The impact of foreign exchange rate movements increased property, office and technology expenses by $0.2 million during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . After allowing for foreign exchange rate movements, the increase was $14.4 million . This increase was comprised of a $9.3 million increase in technology and communications expenses due to increases in depreciation and maintenance of $5.3 million as a result of long-term technology projects recently brought into service and outsourced administration costs of $4.0 million. Property and office costs increased $5.1 million over the comparable 2016 period, primarily due to $3.4 million credit recorded in the third quarter of 2016 related to a vacated leased property and property taxes and office expenses of $2.9 million.
Property, office and technology costs increased by $26.9 million ( 11.2% ) to $267.3 million in the nine months ended September 30, 2017 ( nine months ended September 30, 2016 : $240.4 million ). The impact of foreign exchange rate movements decreased property, office and technology expenses by $4.2 million during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . After allowing for foreign exchange rate movements, the increase was $31.1 million . This increase was comprised of a $21.2 million increase in technology and communications expenses primarily due to increases in outsourced administration costs of $11.9 million and increases in depreciation and maintenance of $9.3 million as a result of long-term technology projects recently brought into service. Property and office costs increased $9.9 million over the comparable 2016 period, primarily due to increases in rent expenses of $5.0 million and property taxes and

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office expenses of $4.4 million. Property and office costs in the nine months ended September 30, 2016 included a $3.4 million credit related to a vacated leased property.
General and Administrative
General and administrative expenses increased by $3.1 million ( 3.7% ) to $86.6 million in the three months ended September 30, 2017 ( three months ended September 30, 2016 : $83.5 million ). The impact of foreign exchange rate movements increased general and administrative expenses by $0.4 million during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . After allowing for foreign exchange rate movements, general and administrative costs increased $2.7 million compared to the same period in 2016 .
Increases in general and administrative expenses for the three months ended September 30, 2017 were driven by increases in consulting, audit, legal and professional services costs of $5.6 million, which were primarily associated with the business optimization initiative and acquisition-related costs and a 2017 increase in fund expenses of $1.8 million. These increases were partially offset by a decrease of $4.7 million in fund launch costs incurred by CIP compared to the three months ended September 30, 2016 .
General and administrative expenses increased by $10.5 million ( 4.4% ) to $250.5 million in the nine months ended September 30, 2017 ( three months ended September 30, 2016 : $240.0 million ). The impact of foreign exchange rate movements decreased general and administrative expenses by $5.5 million during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . After allowing for foreign exchange rate movements, general and administrative costs increased $16.0 million compared to the same period in 2016 .
General and administrative expenses for the nine months ended September 30, 2017 included an increase of $24.4 million in consulting, audit, legal and professional services costs, primarily related to the business optimization initiative and acquisition-related costs. General and administrative expenses also included an increase of $2.4 million in irrecoverable taxes and an increase of $3.1 million in fund expenses compared to the nine months ended September 30, 2016 . These increases were partially offset by a decrease of $11.8 million in fund launch costs incurred by CIPs.
Other Income and Expenses
The main categories of other income and expenses, and the dollar and percentage changes between periods are as follows:
 
 
 
 
 
Variance
 
 
 
 
 
Variance
 
Three months ended September 30,
 
2017 vs 2016
 
Nine months ended September 30,
 
2017 vs 2016
$ in millions
2017
 
2016
 
$ Change
 
% Change
 
2017
 
2016
 
$ Change
 
% Change
Equity in earnings of unconsolidated affiliates
12.9

 
5.5

 
7.4

 
134.5
 %
 
41.1

 
(2.1
)
 
43.2

 
N/A

Interest and dividend income
2.5

 
2.6

 
(0.1
)
 
(3.8
)%
 
7.0

 
8.7

 
(1.7
)
 
(19.5
)%
Interest expense
(23.6
)
 
(23.9
)
 
0.3

 
(1.3
)%
 
(71.2
)
 
(69.9
)
 
(1.3
)
 
1.9
 %
Other gains and losses, net
18.9

 
16.2

 
2.7

 
16.7
 %
 
27.6

 
7.3

 
20.3

 
278.1
 %
Other income/(expense) of CIP, net
31.7

 
39.0

 
(7.3
)
 
(18.7
)%
 
92.5

 
69.4

 
23.1

 
33.3
 %
Total other income and expenses
42.4

 
39.4

 
3.0

 
7.6
 %
 
97.0

 
13.4

 
83.6

 
623.9
 %
Equity in earnings of unconsolidated affiliates
Equity in earnings of unconsolidated affiliates increased by $7.4 million to $12.9 million in the three months ended September 30, 2017 ( three months ended September 30, 2016 : $5.5 million ). The increase in equity in earnings is driven by increases of $3.1 million in earnings from our real estate investments, $1.9 million from private equity investments and $2.0 million from our joint venture investments in China.
Equity in earnings of unconsolidated affiliates increased by $43.2 million to $41.1 million in the nine months ended September 30, 2017 ( nine months ended September 30, 2016 : $2.1 million loss). The increase is primarily due to a non-cash impairment charge of $17.8 million related to the company's former 49% investment in its Indian joint venture taken in the first quarter of 2016. The increase also results from a $16.3 million increase in earnings from our investments in real estate products and an increase of $7.8 million from our private equity investments.

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Other gains and losses, net
Other gains and losses, net were a gain of $18.9 million in the three months ended September 30, 2017 as compared to a net gain of $16.2 million in the three months ended September 30, 2016 . The 2017 period included a realized gain of $12.1 million related to revaluation of Euros held in the U.K. in anticipation of payment for the Source acquisition, net trading gains of $6.1 million on the appreciation of investments and the total return swap held for our deferred compensation plans ( three months ended September 30, 2016 : $7.2 million net gain), net foreign exchange gains on intercompany loans of $2.7 million ( three months ended September 30, 2016 : $0.6 million net loss) and $2.1 million of net investment gains related to the mark-to-market on our trading investments and realized gains from available-for-sale investments ( three months ended September 30, 2016 : $3.3 million net gain). These gains were partially offset by net losses during the period of $2.5 million related to the mark-to-market of foreign exchange put option contracts intended to provide protection against the impact of a significant decline in the Pound Sterling/U.S. Dollar and Euro/U.S. Dollar foreign exchange rates ( three months ended September 30, 2016 : $0.9 million gain) and a $1.6 million loss related to an acquisition-related change in the fair value of the contingent consideration liability ( three months ended September 30, 2016 : $5.3 million net gain).
Other gains and losses, net were a gain of $27.6 million in the nine months ended September 30, 2017 as compared to a net loss of $7.3 million in the nine months ended September 30, 2016 . The 2017 period included a realized gain of $12.1 million related to revaluation of Euros held in the U.K. in anticipation of payment for the Source acquisition, net trading gains of $21.0 million on the appreciation of investments and instruments held for our deferred compensation plans ( nine months ended September 30, 2016 : $9.2 million net gain), $15.3 million net gains related to the mark-to-market on our trading investments and realized gains from available-for-sale investments ( nine months ended September 30, 2016 : $1.8 million net gain) and net foreign exchange gain on intercompany loans of $2.2 million ( nine months ended September 30, 2016 : $7.4 million net loss). These gains were partially offset by net losses during the period of $19.9 million related to the mark-to-market of foreign exchange put option contracts intended to provide protection against the impact of a significant decline in the Pound Sterling/U.S. Dollar and Euro/U.S. Dollar foreign exchange rates ( nine months ended September 30, 2016 : $10.0 million net gain). Other gains and losses in the nine months ended September 30, 2017 also included an investment impairment charge of $3.2 million.
Other income/(expense) of CIP
In the three months ended September 30, 2017 , interest and dividend income of CIP increased by $2.6 million ( 5.2% ) to $52.7 million ( three months ended September 30, 2016 : $50.1 million ). Interest expense of CIP increased by $7.5 million ( 26.0% ) to $36.3 million ( three months ended September 30, 2016 : $28.8 million ).
In the nine months ended September 30, 2017 , interest and dividend income of CIP increased by $15.7 million ( 11.2% ) to $156.4 million ( nine months ended September 30, 2016 : $140.7 million ). Interest expense of CIP increased by $27.9 million ( 31.2% ) to $117.3 million ( nine months ended September 30, 2016 : $89.4 million ).
The increase in interest income and interest expense of CIP in 2017 is primarily due to the impact of newly consolidated CLOs and other funds during 2016 and the nine months ended 2017 , partially offset by the impact of funds deconsolidated during 2017.
Included in other gains/(losses) of CIP, net, are realized and unrealized gains and losses on the underlying investments and debt of CIP. In the three months ended September 30, 2017 , other gains and losses of CIP were a net gain of $15.3 million , as compared to a net gain of $17.7 million in the three months ended September 30, 2016 . The net gain during the three months ended September 30, 2017 was attributable to market-driven gains of investments held by consolidated funds.
Included in other gains/(losses) of CIP, net, are realized and unrealized gains and losses on the underlying investments and debt of CIP. In the nine months ended September 30, 2017 , other gains and losses of CIP were a net gain of $53.4 million , as compared to a net gain of $18.1 million in the nine months ended September 30, 2016 . The net gain during the nine months ended September 30, 2017 was attributable to market-driven gains of investments held by consolidated funds.
Net impact of CIP and related noncontrolling interests in consolidated entities
The net impact to net income attributable to Invesco Ltd. in each period primarily represents the changes in the value of the company's holding in its consolidated CLOs, which is reclassified into other gains/(losses) from accumulated other comprehensive income upon consolidation. The consolidation of investment products during the three months ended September 30, 2017 resulted in a net decrease in net income attributable to Invesco Ltd. of $1.3 million ( three months ended September 30, 2016 : $3.2 million increase ). The consolidation of investment products during the nine months ended September 30, 2017 resulted in a net increase in net income attributable to Invesco Ltd. of $1.5 million ( nine months ended September 30, 2016 ; $2.8 million increase).

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Noncontrolling interests in consolidated entities represent the profit or loss amounts attributed to third party investors in CIP. The impact of any gains or losses resulting from valuation changes in the investments of non-CLO CIP attributable to the interests of third parties are offset by resulting changes in gains and losses attributable to noncontrolling interests in consolidated entities and therefore do not have a material effect on the financial condition, operating results (including earnings per share), liquidity or capital resources of the company's common shareholders. Similarly, any gains or losses resulting from valuation changes in the investments of CLOs attributable to the interests of third parties are offset by the calculated value of the notes issued by the CLOs (offsetting in other gains/(losses) of CIP) and therefore also do not have a material effect on the financial condition, operating results (including earnings per share), liquidity or capital resources of the company's common shareholders.
Additionally, CIP represent less than 1% of the company's AUM. Therefore, the net gains or losses of CIP are not indicative of the performance of the company's aggregate AUM.
Income Tax Expense
The company's subsidiaries operate in several taxing jurisdictions around the world, each with its own statutory income tax rate. As a result, the blended average statutory tax rate will vary from year to year depending on the mix of the profits and losses of the company's subsidiaries.
Our effective tax rate increased to 31.0% for the three months ended September 30, 2017 ( three months ended September 30, 2016 : 26.0% ). The inclusion of income from non-controlling interests in consolidated entities decreased our effective tax rate by 0.5% in 2017 and decreased our rate by 1.1% in 2016 . 2017 included a 3.5% rate increase as a result of Illinois tax regulation changes enacted in the quarter. The remainder of the rate movement for 2017 was primarily due to changes in the mix of pre-tax income.
Our effective tax rate increased to 28.3% for the nine months ended September 30, 2017 ( nine months ended September 30, 2016 : 27.4% ). The inclusion of income from non-controlling interests in consolidated entities decreased our effective tax rate by 0.5% in 2017 and decreased our rate by 0.7% in 2016 . 2017 included a 1.3% rate increase as a result of Illinois tax regulation changes enacted in the year. 2017 included a 0.2% rate decrease as a result of movement from our foreign currency hedge contracts and 0.2% rate decrease related to excess tax benefits on share based compensation for vestings of our annual share awards. 2016 included a 0.1% rate decrease as a result of adjustments related to changes in the fair value of contingent consideration and a 0.5% rate increase as a result of the non-cash impairment charge related to the 49% investment in the company’s Indian joint venture. The remainder of the rate movement for 2017 was primarily due to changes in the mix of pre-tax income.
Schedule of Non-GAAP Information
We are presenting the following non-GAAP performance measures: net revenues (and by calculation, net revenue yield on AUM), adjusted operating income, adjusted operating margin, adjusted net income attributable to Invesco Ltd., and adjusted diluted EPS. We believe these non-GAAP measures provide greater transparency into our business on an ongoing operations basis and allow more appropriate comparisons with industry peers. Management uses these performance measures to evaluate the business and for internal management reporting. The most directly comparable U.S. GAAP measures are operating revenues (and by calculation, gross revenue yield on AUM), operating income, operating margin, net income attributable to Invesco Ltd., and diluted EPS. Each of these measures is discussed more fully below.
These non-GAAP measures should not be considered as substitutes for any measures derived in accordance with U.S. GAAP and may not be comparable to other similarly titled measures of other companies. Additional reconciling items may be added in the future to these non-GAAP measures if deemed appropriate. The tax effect related to reconciling items have been calculated based on the tax rate attributable to the jurisdiction to which the transaction relates.
The following are reconciliations of operating revenues, operating income (and by calculation, operating margin), and net income attributable to Invesco Ltd. (and by calculation, diluted EPS) on a U.S. GAAP basis to net revenues, adjusted operating income (and by calculation, adjusted operating margin), and adjusted net income attributable to Invesco Ltd. (and by calculation, adjusted diluted EPS). Notes to the reconciliations follow the tables.

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Reconciliation of Operating revenues to Net revenues:
 
Three months ended September 30,
 
Nine months ended September 30,
$ in millions
2017
 
2016
 
2017
 
2016
Operating revenues, U.S. GAAP basis
1,337.7

 
1,201.6

 
3,784.7

 
3,539.7

Proportional share of revenues, net of third-party distribution expenses, from joint venture investments (1)
13.1

 
9.5

 
35.2

 
31.1

Third party distribution, service and advisory expenses  (2)
(380.4
)
 
(362.1
)
 
(1,095.6
)
 
(1,057.7
)
CIP (3)
6.2

 
5.7

 
25.7

 
16.3

Net revenues
976.6

 
854.7

 
2,750.0

 
2,529.4

Reconciliation of Operating income to Adjusted operating income:
 
Three months ended September 30,
 
Nine months ended September 30,
$ in millions
2017
 
2016
 
2017
 
2016
Operating income, U.S. GAAP basis
355.3

 
306.3

 
932.8

 
882.2

Proportional share of net operating income from joint venture investments (1)
5.8

 
3.0

 
12.4

 
10.5

CIP (3)
10.4

 
13.1

 
30.9

 
33.4

Business combinations (4)
8.6

 
4.5

 
22.1

 
18.5

Compensation expense related to market valuation changes in deferred compensation plans (5)
5.0

 
4.1

 
14.1

 
5.7

Other reconciling items (6)
12.3

 
8.3

 
68.7

 
26.5

Adjusted operating income
397.4

 
339.3

 
1,081.0

 
976.8

 
 
 
 
 
 
 
 
Operating margin*
26.6
%
 
25.5
%
 
24.6
%
 
24.9
%
Adjusted operating margin**
40.7
%
 
39.7
%
 
39.3
%
 
38.6
%
Reconciliation of Net income attributable to Invesco Ltd. to Adjusted net income attributable to Invesco Ltd.:
 
Three months ended September 30,
 
Nine months ended September 30,
$ in millions, except per share data
2017
 
2016
 
2017
 
2016
Net income attributable to Invesco Ltd., U.S. GAAP basis
267.5

 
241.2

 
719.1

 
627.7

CIP (3)
1.3

 
(3.2
)
 
(1.5
)
 
(2.8
)
Business combinations, net of tax (4)
2.7

 
5.4

 
22.3

 
50.6

Deferred compensation plan market valuation changes and dividend income less compensation expense, net of tax (5)
(0.7
)
 
(2.4
)
 
(4.7
)
 
(2.6
)
Other reconciling items, net of tax (6)
21.0

 
5.2

 
71.6

 
11.1

Adjusted net income attributable to Invesco Ltd.
291.8

 
246.2

 
806.8

 
684.0

 
 
 
 
 
 
 
 
Average shares outstanding - diluted
410.5

 
412.9

 
409.6

 
417.0

Diluted EPS

$0.65

 

$0.58

 

$1.76

 

$1.51

Adjusted diluted EPS***

$0.71

 

$0.60

 

$1.97

 

$1.64

____________
*
Operating margin is equal to operating income divided by operating revenues.
**
Adjusted operating margin is equal to adjusted operating income divided by net revenues.
***
Adjusted diluted EPS is equal to adjusted net income attributable to Invesco Ltd. divided by the weighted average number of common and restricted shares outstanding. There is no difference between the calculated earnings per share amounts presented above and the calculated earnings per share amounts under the two class method.

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(1)
Proportional share of net revenues and operating income from joint venture investments
The company's two joint venture investments in China are proportionately consolidated in the company's non-GAAP measures. Enhancing our operations in China is one effort that we believe could improve our competitive position over time. Accordingly, we believe that it is appropriate to evaluate the contribution of our joint venture investments to the operations of the business.
(2)
Third-party distribution, service and advisory expenses
Third-party distribution, service and advisory expenses include renewal commissions, management fee rebates and distribution costs (12b-1 and marketing support) paid to brokers and independent financial advisors, and other service and administrative fees paid to third parties. While the terms used for these types of expenses vary by geography, they are all expense items that are closely linked to the value of AUM and the revenue earned by Invesco from AUM. Since the company has been deemed to be the principal in the third-party arrangements, the company must reflect these expenses gross of operating revenues under U.S. GAAP.
Management believes that the deduction of third-party distribution, service and advisory expenses from operating revenues in the computation of net revenues (and by calculation, net revenue yield on AUM) and the related computation of adjusted operating income (and by calculation, adjusted operating margin) appropriately reflects the nature of these expenses as revenue-sharing activities, as these costs are passed through to external parties who perform functions on behalf of, and distribute, the company’s managed funds. Further, these expenses vary extensively by geography due to the differences in distribution channels. The net presentation assists in identifying the revenue contribution generated by the business, removing distortions caused by the differing distribution channel fees and allowing for a fair comparison with U.S. peer investment managers and within Invesco’s own investment units. Additionally, management evaluates net revenue yield on AUM, which is equal to net revenues divided by average AUM during the reporting period. This financial measure is an indicator of the basis point net revenues we receive for each dollar of AUM we manage and is useful when evaluating the company’s performance relative to industry competitors and within the company for capital allocation purposes.
(3)
CIP
See Part I, Item 1, Financial Statements, Note 12 - “Consolidated Investment Products” for a detailed analysis of the impact to the company’s Condensed Consolidated Financial Statements from the consolidation of CIP. The reconciling items add back the management and performance fees earned by Invesco from the consolidated products and remove the revenues and expenses recorded by the consolidated products that have been included in the U.S. GAAP Condensed Consolidated Statements of Income.
Management believes that the consolidation of investment products may impact a reader's analysis of our underlying results of operations and could result in investor confusion or the production of information about the company by analysts or external credit rating agencies that is not reflective of the underlying results of operations and financial condition of the company. Accordingly, management believes that it is appropriate to adjust operating revenues, operating income and net income for the impact of CIP in calculating the respective net revenues, adjusted operating income and adjusted net income.
CIP Revenue:
 
Three months ended September 30,
 
Nine months ended September 30,
$ in millions, except per share data
2017
 
2016
 
2017
 
2016
Management fees earned from CIP, eliminated upon consolidation
6.2

 
5.3

 
18.9

 
15.0

Performance fees earned from CIP, eliminated upon consolidation
—

 
0.4

 
6.8

 
1.3

CIP related adjustments in arriving at net revenues
6.2

 
5.7

 
25.7

 
16.3

(4)
Business combinations
Adjustments are comprised of amounts incurred by the company in connection with business combinations, including intangible asset amortization, changes in the fair value of the contingent consideration liability payable in future periods, business combination-related transaction and integration costs, impairments, employee compensation expenses

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associated with business combinations and all related tax effects, as well as the reversal of deferred tax liabilities recorded under U.S. GAAP resulting from tax amortization of goodwill and indefinite-lived intangible assets. Currency gains recognized on revaluation of foreign currencies held in anticipation of payment for acquisition have also been adjusted.
While finite-lived intangible assets are amortized under U.S. GAAP, there is no amortization charge on goodwill and indefinite-lived intangibles. In certain qualifying situations, these can be amortized for tax purposes, generally over a 15-year period, as is the case in the U.S. These deferred tax liabilities represent tax benefits that are not included in the Condensed Consolidated Statements of Income absent an impairment charge or the disposal of the related business. The company receives these tax benefits but does not anticipate a sale or impairment of these assets in the foreseeable future, and therefore the deferred tax liabilities recognized under U.S. GAAP are not expected to be used either through a credit in the Condensed Consolidated Statements of Income or through settlement of tax obligations.
Management believes it is useful to investors and other users of our Condensed Consolidated Financial Statements to adjust for these business combination-related items in arriving at adjusted operating income, adjusted operating margin and adjusted diluted EPS, as this will aid comparability of our results period to period, and aid comparability with peer companies that may not have similar business combination-related charges.
See table below for a reconciliation of business combination-related items:
 
Three months ended September 30,
 
Nine months ended September 30,
$ in millions
2017
 
2016
 
2017
 
2016
Business combinations:
 
 
 
 
 
 
 
Intangible amortization expense
4.0

 
3.7

 
10.8

 
10.5

Employee compensation expense
1.7

 
0.8

 
4.4

 
6.5

Other business combination-related items
2.9

 
—

 
6.9

 
1.5

Adjustments to operating income
8.6

 
4.5

 
22.1

 
18.5

Changes in the fair value of contingent consideration
1.6

 
(5.3
)
 
(0.1
)
 
6.3

Foreign exchange gain related to business acquisitions

(12.1
)
 
—

 
(12.1
)
 
—

Other-than-temporary impairment
—

 
—

 
—

 
17.8

Taxation:
 
 
 
 
 
 
 
Taxation on amortization
(0.4
)
 
(0.3
)
 
(1.2
)
 
(1.0
)
Taxation on employee compensation expense
(0.6
)
 
(0.2
)
 
(1.7
)
 
(2.4
)
Deferred taxation
4.9

 
4.7

 
14.7

 
14.3

Taxation on other business combination-related items
(1.0
)
 
—

 
(1.8
)
 
(0.5
)
Taxation on changes in the fair value of contingent consideration
(0.6
)
 
2.0

 
0.1

 
(2.4
)
Taxation on foreign exchange gain related to business acquisitions
2.3

 
—

 
2.3

 
—

Adjustments to net income attributable to Invesco Ltd.
2.7

 
5.4

 
22.3

 
50.6

(5)
Market movement on deferred compensation plan liabilities
Certain deferred compensation plan awards involve a return to the employee linked to the appreciation (depreciation) of specified investments, typically the funds managed by the employee. Invesco hedges economically the exposure to market movements.
Since these plans are hedged economically, management believes it is useful to reflect the offset ultimately achieved from hedging the investment market exposure in the calculation of adjusted operating income (and by calculation, adjusted operating margin) and adjusted net income attributable to Invesco Ltd. (and by calculation, adjusted diluted EPS), to produce results that will be more comparable period to period.
See below for a reconciliation of deferred compensation related items:

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Three months ended September 30,
 
Nine months ended September 30,
$ in millions
2017
 
2016
 
2017
 
2016
Market movement on deferred compensation plan liabilities:
 
 
 
 
 
 
 
Compensation expense related to market valuation changes in deferred compensation liability
5.0

 
4.1

 
14.1

 
5.7

Adjustments to operating income
5.0

 
4.1

 
14.1

 
5.7

Market valuation changes and dividend income from investments and instruments held related to deferred compensation plans in other income/(expense)
(6.3
)
 
(7.6
)
 
(21.6
)
 
(9.8
)
Taxation:
 
 
 
 
 
 
 
Taxation on deferred compensation plan market valuation changes and dividend income less compensation expense
0.6

 
1.1

 
2.8

 
1.5

Adjustments to net income attributable to Invesco Ltd.
(0.7
)
 
(2.4
)
 
(4.7
)
 
(2.6
)
(6)
Other reconciling items
Each of these other reconciling items has been adjusted from U.S. GAAP to arrive at the company's non-GAAP financial measures for the reasons either outlined in the paragraphs above, due to the unique character and magnitude of the reconciling item, or because the item represents a continuation of a reconciling item adjusted from U.S. GAAP in a prior period.
 
Three months ended September 30,
 
Nine months ended September 30,
$ in millions
2017
 
2016
 
2017
 
2016
Other non-GAAP adjustments:
 
 
 
 
 
 
 
Business optimization charges: (a)
 
 
 
 
 
 
 
Employee compensation
7.6

 
5.8

 
27.2

 
14.2

Consulting and temporary labor
4.5

 
5.4

 
19.6

 
14.1

Property, office and technology
0.2

 
0.5

 
2.2

 
0.6

Vacated property lease credit (b)
—

 
(3.4
)
 
—

 
(3.4
)
Regulatory charge (c)
—

 
—

 
—

 
1.0

Senior executive retirement and related costs (d)
—

 
—

 
19.7

 
—

Adjustments to operating income
12.3

 
8.3

 
68.7

 
26.5

Foreign exchange hedge (gain)/loss (d)
0.5

 
2.2

 
21.5

 
(7.6
)
Taxation:
 
 
 
 
 
 
 
Taxation on business optimization charges (a)
(3.8
)
 
(3.7
)
 
(16.8
)
 
(9.2
)
Taxation on vacated property lease credit (b)
—

 
0.7

 
—

 
0.7

Taxation on regulatory-related charges (c)
—

 
(1.4
)
 
—

 
(1.8
)
Taxation on senior executive retirement and related costs (d)
—

 
—

 
(5.9
)
 
—

Taxation on foreign exchange hedge amortization (e)
(0.2
)
 
(0.9
)
 
(8.1
)
 
2.5

Retroactive state tax adjustment (f)
12.2

 
—

 
12.2

 
—

Adjustments to net income attributable to Invesco Ltd.
21.0

 
5.2

 
71.6

 
11.1

    

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(a)
Business optimization: Operating expenses for the three and nine months ended September 30, 2017 include costs associated with a business transformation initiative discussed in Part I, Item 1, Financial Statements - Note 14 , "Business Optimization."
(b)
General and administrative expense for the three and nine months ended September 30, 2016 include a credit of $3.4 million related to the provision associated with a vacated European leased property. This credit relates to a charge recorded in a prior year.
(c)
General and administrative expense for the nine months ended September 30, 2016 include a net settlement charge of $1.0 million pertaining to regulatory actions.
(d)
Operating expenses for the nine months ended September 30, 2017 reflect the cost of multiple senior executive retirements, including, among others, the former Senior Managing Director of EMEA and the Chairman of our Private Equity business, which resulted in expenses of $19.7 million related to accelerated vesting of deferred compensation and other separation costs. The number of senior executive retirements and magnitude of their retirement costs incurred in one quarter was unprecedented for Invesco. The company deemed it appropriate to adjust these costs from U.S. GAAP total compensation expenses in an effort to isolate and evaluate our level of ongoing compensation expenses and to allow for more appropriate comparisons to internal metrics and with the level of compensation expenses incurred by industry peers.  
(e)
Included within other gains and losses, net is the mark-to-market of foreign exchange put option contracts intended to provide protection against the impact of a significant decline in the Pound Sterling/U.S. Dollar and the Euro/U.S. Dollar foreign exchange rates. The Pound Sterling contracts provide coverage through December 31, 2018 and the Euro contracts provide coverage through December 27, 2017 . The adjustment from U.S. GAAP to non-GAAP earnings removes the impact of market volatility; therefore, the company's non-GAAP results include only the amortization of the cost of the contracts during the contract period.
(f) The income tax provision for the three and nine months ended September 30, 2017 includes a retroactive state tax adjustment of $12.2 million related to 2016 and prior open tax years caused by changes in state tax regulations.



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Balance Sheet Discussion
Cash and cash equivalents
Cash and cash equivalents increased by $388.3 million from $1,328.0 million at December 31, 2016 to $1,716.3 million at September 30, 2017 . See “Cash Flows Discussion” in the following section within this Management's Discussion and Analysis for additional discussion regarding the movements in cash flows during the period.
Unsettled fund receivables and payables
Unsettled fund receivables increased by $157.5 million from $672.9 million at December 31, 2016 to $830.4 million at September 30, 2017 , due primarily to higher transaction activity between funds and investors in late September 2017 when compared to late December 2016 in our U.K. and cross-border funds, together with UITs. In our U.K. and cross-border operations, unsettled fund receivables are created by the normal settlement periods on transactions initiated by certain clients. In the company's capacity as sponsor of UITs, the company records receivables from brokers, dealers, and clearing organizations for unsettled sell trades of securities and UITs in addition to receivables from customers for unsettled sell trades of UITs. The presentation of the unsettled fund receivables and substantially offsetting payables ( $810.8 million at September 30, 2017 up from $659.3 million at December 31, 2016 ) at trade date reflects the legal relationship between the underlying investor and the company.
Investments
As of  September 30, 2017 we had $690.9 million in total investments ( December 31, 2016 : $795.3 million ). Included in investments are $235.2 million of seed money investments in affiliated funds used to seed funds as we launch new products, and $89.6 million of investments related to assets held for deferred compensation plans, which are also held primarily in affiliated funds. Seed investments decreased by a net $14.6 million during the  nine months ended September 30, 2017 . The decrease in the period reflects redemptions of $147.2 million of seed investments. The redemptions were offset by purchases of $51.9 million, a non-cash increase of $61.2 million due to the deconsolidation of certain CIP in the period (restoring the company's formerly eliminated investment balances) as well as an increase of $19.5 million driven by market valuation changes and foreign exchange movements. Investments related to deferred compensation awards decreased by a net $80.9 million during the period, primarily related to the disposition of certain investments held to hedge economically one of the company's deferred compensation plans. Such disposition occurred in conjunction with the entrance by the company into a one-year renewable total return swap to more efficiently hedge this deferred compensation plan. This transaction did not have a material impact to the company's operations or financial position.
Included in investments are $296.5 million in equity method investments in our Chinese joint venture and in certain of the company’s private equity partnerships, real estate partnerships and other co-investments ( December 31, 2016 : $279.0 million ). The increase of $17.5 million in equity method investments was driven by an increase due to current period earnings, capital calls into certain partnership investments and increases due to the changes in foreign exchange rates. This increase was partially offset by a decrease resulting from capital returns and the consolidation of certain investments during the current period.
Assets held for policyholders and policyholder payables
One of our subsidiaries, Invesco Perpetual Life Limited, is an insurance company that was established to facilitate retirement savings plans in the U.K. The entity holds assets that are managed for its clients on its balance sheet with an equal and offsetting liability. The increase in the balance of these accounts from $8,224.2 million at December 31, 2016 to $12,102.6 million at September 30, 2017 was the result of new business net inflows and market movement of $3,021.3 million and exchange rate movements of $857.1 million.
Intangible Assets, net
Intangible assets increased from $1,399.4 million at December 31, 2016 , to $1,561.2 million at September 30, 2017 . The increase includes $167.1 million related to the acquisition of Source.
Goodwill
Goodwill increased from $6,129.2 million at December 31, 2016 , to $6,573.4 million at September 30, 2017 . The increase consists of $194.1 million related to the acquisition of Source, and foreign exchange movements of $250.2 million. The company's annual goodwill impairment review is performed as of October 1 of each year.

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Liquidity and Capital Resources
Our capital structure, together with available cash balances, cash flows generated from operations, existing capacity under our credit facility and further capital market activities, if necessary, should provide us with sufficient resources to meet present and future cash needs, including operating, debt and other obligations as they come due and anticipated future capital requirements.
Our capital management priorities have evolved with the growth and success of our business and include:
• reinvestment in the business;
• moderate annual growth of dividends (as further discussed in the "Dividends" section below);
• share repurchase; and
• establishment of an approximate $1 billion cash buffer in excess of European regulatory and liquidity requirements.
These priorities are executed in a manner consistent with our desire to maintain strong, investment grade credit ratings.  As of the filing of the Report, Invesco held credit ratings of A/Negative, A2/Stable and A-/Stable from Standard & Poor’s Ratings Service (“S&P”), Moody’s Investor Services (“Moody’s”) and Fitch Ratings (“Fitch”), respectively. Our ability to continue to access the capital markets in a timely manner depends on a number of factors, including our credit ratings, the condition of the global economy, investors’ willingness to purchase our securities, interest rates, credit spreads and the valuation levels of equity markets. If we are unable to access capital markets in a timely manner, our business could be adversely impacted.

As previously announced, Invesco has entered into a definitive agreement to acquire Guggenheim Investments' ETF business. The acquisition is expected to close in the second quarter of 2018 for an anticipated purchase price of $1.2 billion. The company expects approximately 85% of the purchase price will be funded through the use of the company’s existing credit facility with the remainder paid in cash. The company plans to repay the amount borrowed over the course of 2018, returning leverage ratios to pre-acquisition levels, through the curtailment of open market share repurchases.

Certain of our subsidiaries are required to maintain minimum levels of capital. Such requirements may change from time-to-time as additional guidance is released based on a variety of factors, including balance sheet composition, assessment of risk exposures and governance, and review from regulators. These and other similar provisions of applicable law may have the effect of limiting withdrawals of capital, repayment of intercompany loans and payment of dividends by such entities. All of our regulated EU subsidiaries are subject to consolidated capital requirements under EU Directives, including those arising from the Capital Requirements Directive and the United Kingdom's Internal Capital Adequacy Assessment Process, and capital is maintained within this sub-group to satisfy these regulations. We meet these requirements in part by holding cash and cash equivalents. This retained cash can be used for general business purposes in the European sub-group in the countries where it is located. Due to the capital restrictions, the ability to transfer cash between certain jurisdictions may be limited. In addition, transfers of cash between international jurisdictions may have adverse tax consequences. We are in compliance with all regulatory minimum net capital requirements. As of September 30, 2017 , the company's minimum regulatory capital requirement was $746.0 million ( December 31, 2016 : $590.8 million ); the increase was driven primarily by increased business activity and strengthening of the Pound Sterling against the U.S. Dollar. The total amount of non-U.S. cash and cash equivalents was $1,395.8 million at September 30, 2017 ( December 31, 2016 : $1,168.4 million ).
In addition, the company is required to hold cash deposits with clearing organizations or to otherwise segregate cash to maintain compliance with federal and other regulations in connection with its UIT broker dealer entity. At September 30, 2017 , these cash deposits totaled $11.4 million ( December 31, 2016 : $11.4 million ).
The consolidation of $5.7 billion and $4.3 billion of total assets and long-term debt of CIP as of September 30, 2017 , respectively, did not impact the company’s liquidity and capital resources. The majority of CIP balances related to consolidated CLOs. The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs. The company has no right to the benefits from, nor does it bear the risks associated with, the collateral assets held by the CLOs, beyond the company’s minimal direct investments in, and management and performance fees generated from, these products, which are eliminated upon consolidation. If the company were to liquidate, the collateral assets would not be available to the general creditors of the company, and as a result, the company does not consider them to be company assets. Likewise, if the CLOs were to liquidate, their investors would have no recourse to the general credit of the company. The company therefore does not consider this debt to be an obligation of the company. See Part I, Item 1, Financial Statements - Note 12 , “Consolidated Investment Products,” for additional details.


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Cash Flows Discussion
The ability to consistently generate cash flow from operations in excess of dividend payments, share repurchases, capital expenditures, and ongoing operating expenses is one of our company's fundamental financial strengths. Operations continue to be financed from current earnings and borrowings. Our principal uses of cash, other than for operating expenses, include dividend payments, capital expenditures, acquisitions, purchase of our shares in the open market and investments in certain new investment products.
Cash flows of CIP (discussed in Item 1, Financial Statements - Note  12 , “Consolidated Investment Products”) are reflected in Invesco's cash provided by or used in operating activities, investing activities and financing activities. Cash held by CIP is not available for general use by Invesco, nor is Invesco cash available for general use by its CIP. Accordingly, the table below presents the consolidated total cash flows of the company and separately presents the impact to the cash flows from CIP. The impact is illustrated in the tables immediately below by a column which shows the dollar-value change in the consolidated figures, as caused by the consolidation of CIP. For example, the impact of CIP on net cash provided by/(used in) operating activities for the nine months ended September 30, 2017 reflects cash provided of $1.5 million ; however, this was not provided as part of the company's corporate cash balances. Excluding the impact of CIP, cash provided by operations was $1,010.5 million during the nine months ended September 30, 2017 .
Also as illustrated in the table below, the sum of the operating, investing and financing cash flows of CIP offsets to a zero impact to the company's change in cash and cash equivalent balances from period to period. The cash flows of CIP do not form part of the company’s cash flow management processes, nor do they form part of the company’s significant liquidity evaluations and decisions for the reasons noted. The discussion that follows the table focuses on the company’s cash flows.


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Summary of Cash Flow Statement Impact of CIP
 
Nine months ended September 30, 2017
 
Nine months ended September 30, 2016
$ in millions
 Impact of CIP
 
Invesco Ltd. Consolidated
 
 Impact of CIP
 
Invesco Ltd. Consolidated
Operating activities:
 
 
 
 
 
 
 
Net income
20.8

 
738.4

 
25.3

 
650.2

Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
 
 
 
 
 
 
 
Amortization and depreciation
—

 
82.2

 
—

 
75.5

Share-based compensation expense
—

 
134.9

 
—

 
118.4

Other (gains)/losses, net
32.4

 
(27.6
)
 
3.7

 
(7.3
)
Other (gains)/losses of CIP, net
(53.4
)
 
(53.4
)
 
(18.1
)
 
(18.1
)
Equity in earnings of unconsolidated affiliates
8.4

 
(41.1
)
 
6.8

 
2.1

Dividends from unconsolidated affiliates
—

 
2.2

 
—

 
16.3

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
(Increase)/decrease in cash held by CIP
251.7

 
251.7

 
(66.2
)
 
(66.2
)
(Purchase)/sale of investments by CIP, net
(277.7
)
 
(277.7
)
 
(131.9
)
 
(131.9
)
(Purchase)/sale of trading investments, net
15.7

 
146.8

 
(12.8
)
 
(13.4
)
(Increase)/decrease in receivables
(16.1
)
 
(3,134.3
)
 
14.7

 
(2,257.5
)
Increase/(decrease) in payables
19.7

 
3,189.9

 
(1.6
)
 
2,213.7

Net cash provided by/(used in) operating activities
1.5

 
1,012.0

 
(180.1
)
 
581.8

Investing activities:
 
 
 
 
 
 
 
Purchase of property, equipment and software
—

 
(82.7
)
 
—

 
(101.3
)
Purchase of available-for-sale investments
6.8

 
(7.8
)
 
7.5

 
(4.3
)
Sale of available-for-sale investments
(15.2
)
 
76.4

 
(5.3
)
 
38.4

Purchase of investments by CIP
(4,432.4
)
 
(4,432.4
)
 
(2,398.0
)
 
(2,398.0
)
Sale of investments by CIP
4,219.6

 
4,219.6

 
1,835.9

 
1,835.9

Purchase of other investments
60.0

 
(115.7
)
 
36.8

 
(98.3
)
Sale of other investments
—

 
77.8

 
(50.0
)
 
67.7

Returns of capital and distributions from unconsolidated partnership investments
(69.8
)
 
74.0

 
(6.5
)
 
30.0

Purchase of business
—

 
(299.2
)
 
—

 
(121.9
)
Net cash provided by/(used in) investing activities
(231.0
)
 
(490.0
)
 
(579.6
)
 
(751.8
)
Financing activities:
 
 
 
 
 
 
 
Purchases of treasury shares
—

 
(58.6
)
 
—

 
(424.7
)
Dividends paid
—

 
(352.7
)
 
—

 
(346.3
)
Excess tax benefits from share-based compensation
—

 
—

 
—

 
(2.4
)
Third-party capital invested into CIP
397.7

 
397.7

 
193.9

 
193.9

Third-party capital distributed by CIP
(93.2
)
 
(93.2
)
 
(64.1
)
 
(64.1
)
Borrowings of debt by CIP
1,887.4

 
1,887.4

 
760.1

 
760.1

Repayments of debt by CIP
(1,962.4
)
 
(1,962.4
)
 
(130.2
)
 
(130.2
)
Net borrowings/(repayments) under credit facility
—

 
(28.7
)
 
—

 
—

Payment of contingent consideration
—

 
(10.3
)
 
—

 
(9.5
)
Net cash provided by/(used in) financing activities
229.5

 
(220.8
)
 
759.7

 
(23.2
)
Increase/(decrease) in cash and cash equivalents
—

 
301.2

 
—

 
(193.2
)
Foreign exchange movement on cash and cash equivalents
—

 
87.1

 
—

 
(76.9
)
Cash and cash equivalents, beginning of period
—

 
1,328.0

 
—

 
1,851.4

Cash and cash equivalents, end of period
—

 
1,716.3

 
—

 
1,581.3

Operating Activities
Operating cash flows include the receipt of investment management and other fees generated from AUM, offset by operating expenses and changes in operating assets and liabilities. Although some receipts and payments are seasonal, particularly bonus payments, in general, after allowing for the change in cash held by CIP, and trading investment activities, our operating cash flows move in the same direction as our operating income.
During the nine months ended September 30, 2017 , cash provided by operating activities increased $430.2 million to $1,012.0 million from $581.8 million provided during the nine months ended September 30, 2016 . As shown in the tables above, the impact of CIP to cash provided by operating activities was $1.5 million of cash provided during the nine months ended September 30, 2017 compared to $180.1 million of cash used during the nine months ended September 30, 2016 . Excluding the impact of CIP, cash provided by operations was $1,010.5 million during the nine months ended September 30, 2017 compared to $761.9 million of cash provided by operating activities during the nine months ended September 30, 2016 .

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The changes in operating assets and liabilities also impact the link between cash provided by operations and net income. Excluding the impact of CIP, the changes in operating assets and liabilities generated $183.1 million of cash in the nine months ended September 30, 2017 , as compared to utilizing $57.5 million in the same period in 2016 , increasing cash provided by operating activities by a net $240.6 million . The increase in cash included a $131.7 million increase in cash related to net purchases and sales of trading investments, and $55.3 million reduction in payroll payments related to annual staff bonuses, related payroll taxes, payroll taxes on annual share award vestings, and annual retirement plan contributions. The company pays the annual cash bonuses and vests deferred compensation awards in the first quarter of each year. There were no significant non-cash items that impacted the comparison between the periods of operating income to net cash provided by operations.
Investing Activities
Net cash used in investing activities totaled $490.0 million for the nine months ended September 30, 2017 ( nine months ended September 30, 2016 : net cash used of $751.8 million ). As shown in the tables above, the impact of CIP on investing activities, including investment purchases, sales and returns of capital, was $231.0 million used ( nine months ended September 30, 2016 : $579.6 million used ). Excluding the impact of CIP cash flows, net cash used in investing activities was $259.0 million ( nine months ended September 30, 2016 : net cash used of $172.2 million ).
For the nine months ended September 30, 2017 , excluding the impact of CIP, cash outflows include $299.2 million related to the purchase of Source ( nine months ended September 30, 2016 : $121.9 million ) and purchases of investments of available-for-sale and other investments of $190.3 million ( nine months ended September 30, 2016 : $146.9 million ). These outflows were partially offset by collected proceeds of $313.2 million from sales and returns of capital of available-for-sale and other investments ( nine months ended September 30, 2016 : $197.9 million ).
During the nine months ended September 30, 2017 , the company had capital expenditures of $82.7 million ( nine months ended September 30, 2016 : $101.3 million ). Our capital expenditures related principally in each period to technology initiatives, including enhancements to platforms from which we maintain our portfolio management systems, improvements in computer hardware and software desktop products for employees, new telecommunications products to enhance our internal information flow, and back-up business recovery systems. Also, in each period, a portion of these costs related to improvements made to the various buildings and workspaces used in our offices. These projects have been funded with proceeds from our operating cash flows.
Financing Activities
Net cash used in financing activities totaled $220.8 million for the nine months ended September 30, 2017 ( nine months ended September 30, 2016 : net cash used of $23.2 million ). As shown in the tables above, the impact of CIP on financing activities provided cash of $229.5 million ( nine months ended September 30, 2016 : cash provided of $759.7 million ). Excluding the impact of CIP, financing activities used cash of $450.3 million in the nine months ended September 30, 2017 ( nine months ended September 30, 2016 : cash used of $782.9 million ).
Financing cash outflows during the nine months ended September 30, 2017 included $352.7 million of dividend payments for the dividends declared in January, April and July ( nine months ended September 30, 2016 : dividends paid of $346.3 million ), the payment of $58.6 million to meet employees' withholding tax obligations on share vestings ( nine months ended September 30, 2016 : $39.7 million ), a repayment of the credit facility of $28.7 million and a payment of $10.3 million of contingent consideration ( nine months ended September 30, 2016 : $9.5 million ). Financing cash outflows during the nine months ended September 30, 2016 also included the purchase of shares through market transactions totaling $385.0 million and excess tax benefits from share-based compensation of $2.4 million .
There were no non-CIP related financing cash inflows for the nine months ended September 30, 2017 and 2016 .
Dividends
Invesco declares and pays dividends on a quarterly basis in arrears. On October 26, 2017 , the company announced a third quarter 2017 cash dividend of 29.0 cents per share to holders of common shares, which will be paid on December 4, 2017 , to shareholders of record as of November 14, 2017 with an ex-dividend date of November 13, 2017 .
The declaration, payment and amount of any future dividends will be declared by our board of directors and will depend upon, among other factors, our earnings, financial condition and capital requirements at the time such declaration and payment are considered. The board has a policy of managing dividends in a prudent fashion, with due consideration given to profit levels, overall debt levels, and historical dividend payouts.

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Share Repurchase Plan
The company did not purchase shares in the open market during the three and nine months ended September 30, 2017 , ( three and nine months ended September 30, 2016 : 1.6 million and 13.3 million shares at a cost of $46.8 million and $385.0 million , respectively). The company did withhold an aggregate of 0.1 million and 1.8 million shares on vesting events during the three and nine months ended September 30, 2017 , respectively to meet employees' withholding tax obligations (three and nine months ended September 30, 2016 : 0.03 million and 1.4 million shares, respectively). The fair value of these shares withheld at the respective withholding dates was $1.3 million and $58.6 million during the three and nine months ended September 30, 2017 (three and nine months ended September 30, 2016 : $0.7 million and $39.7 million ). At September 30, 2017 , approximately $1,643.0 million remains available under the share repurchase authorizations approved by the Board on October 11, 2013 and July 22, 2016.
Long-term debt
Our long-term debt at September 30, 2017 was $2,075.3 million ( December 31, 2016 : $2,102.4 million ) and was comprised of the following:
$ in millions
September 30, 2017
 
December 31, 2016
  Floating rate credit facility expiring August 11, 2022
—

 
28.7

Unsecured Senior Notes:
 
 
 
$600 million 3.125% - due November 30, 2022
596.8

 
596.3

$600 million 4.000% - due January 30, 2024
593.8

 
593.2

$500 million 3.750% - due January 15, 2026
494.9

 
494.5

$400 million 5.375% - due November 30, 2043
389.8

 
389.7

Long-term debt
2,075.3

 
2,102.4

For the nine months ended September 30, 2017 , the company's weighted average cost of debt was 3.94% ( nine months ended September 30, 2016 : 3.95% ).
The company's $1.5 billion unsecured credit facility is scheduled to expire on August 11, 2022. Financial covenants under the credit agreement include: (i) the quarterly maintenance of a debt/EBITDA leverage ratio, as defined in the credit agreement, of not greater than 3.25 :1.00, (ii) a coverage ratio (EBITDA, as defined in the credit agreement/interest payable for the four consecutive fiscal quarters ended before the date of determination) of not less than 4.00:1.00. As of September 30, 2017 , we were in compliance with our financial covenants. At September 30, 2017 , our leverage ratio was 1.22 :1.00 ( December 31, 2016 : 1.35:1.00), and our interest coverage ratio was 18.06 :1.00 ( December 31, 2016 : 16.69:1.00).
The September 30, 2017 coverage ratio calculations are as follows:
$ millions
Total
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
Net income attributable to Invesco Ltd.
945.6

 
267.5

 
239.6

 
212.0

 
226.5

Impact of CIP on net income attributable to Invesco Ltd.
(1.7
)
 
1.3

 
2.9

 
(5.7
)
 
(0.2
)
Tax expense
384.3

 
123.1

 
92.6

 
75.7

 
92.9

Amortization/depreciation/impairment
107.9

 
29.7

 
26.2

 
26.3

 
25.7

Interest expense
94.7

 
23.6

 
23.6

 
24.0

 
23.5

Share-based compensation expense
176.2

 
42.4

 
43.3

 
49.2

 
41.3

Unrealized gains and losses from investments, net *
2.9

 
9.8

 
1.8

 
(7.1
)
 
(1.6
)
EBITDA **
1,709.9

 
497.4

 
430.0

 
374.4

 
408.1

Adjusted debt **

$2,085.9

 
 
 
 
 
 
 
 
Leverage ratio (Debt/EBITDA - maximum 3.25:1.00)
1.22

 
 
 
 
 
 
 
 
Interest coverage (EBITDA/Interest Expense - minimum 4.00:1.00)
18.06

 
 
 
 
 
 
 
 
____________
*
Adjustments for unrealized gains and losses from investments, as defined in our credit facility, may also include non-cash gains and losses on investments to the extent that they do not represent anticipated future cash receipts or expenditures.
**
EBITDA and Adjusted debt are non-GAAP financial measures; however management does not use these measures for anything other than these debt covenant calculations. The calculation of EBITDA above (a reconciliation from net income attributable to Invesco Ltd.) is defined by our credit agreement, and therefore net income attributable to Invesco Ltd. is the

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most appropriate GAAP measure from which to reconcile to EBITDA. The calculation of Adjusted debt is defined in our credit facility and equals total debt of  $2,075.3 million plus $10.6 million in letters of credit.
Credit and Liquidity Risk
Capital management involves the management of the company's liquidity and cash flows. The company manages its capital by reviewing annual and projected cash flow forecasts and by monitoring credit, liquidity and market risks, such as interest rate and foreign currency risks (as discussed in Part I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk”), through measurement and analysis. The company is primarily exposed to credit risk through its cash and cash equivalent deposits, which are held by external firms. The company invests its cash balances in its own institutional money market products, as well as with external high credit-quality financial institutions. These arrangements create exposure to concentrations of credit risk.
Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. All cash and cash equivalent balances are subject to credit risk, as they represent deposits made by the company with external banks and other institutions. As of September 30, 2017 , our maximum exposure to credit risk related to our cash and cash equivalent balances is $1,716.3 million . See Item 1, Financial Statements - Note 13 , “Related Parties,” for information regarding cash and cash equivalents invested in affiliated money market funds.
The company does not utilize credit derivatives or similar instruments to mitigate the maximum exposure to credit risk. The company does not expect any counterparties to its financial instruments to fail to meet their obligations.
Liquidity Risk
Liquidity risk is the risk that the company will encounter difficulty in meeting obligations associated with its financial liabilities. The company is exposed to liquidity risk through its $2,075.3 million in long-term debt. The company actively manages liquidity risk by preparing cash flow forecasts for future periods, reviewing them regularly with senior management, maintaining a committed credit facility, scheduling significant gaps between major debt maturities and engaging external financing sources in regular dialog.
Effects of Inflation
Inflation can impact our organization primarily in two ways. First, inflationary pressures can result in increases in our cost structure, especially to the extent that large expense components such as compensation are impacted. To the degree that these expense increases are not recoverable or cannot be counterbalanced through pricing increases due to the competitive environment, our profitability could be negatively impacted. Secondly, the value of the assets that we manage may be negatively impacted when inflationary expectations result in a rising interest rate environment. Declines in the values of these AUM could lead to reduced revenues as management fees are generally calculated based upon the size of AUM.
Off Balance Sheet Commitments
See Part I, Item 1, Financial Statements - Note 11 , “Commitments and Contingencies - Off Balance Sheet Commitments,” for more information regarding undrawn capital commitments.
Contractual Obligations
We have future obligations under various contracts relating to debt and interest payments, financing and operating leases, long-term defined benefit pension and acquisition contracts. During the nine months ended September 30, 2017 , there were no material changes to the company's contractual obligations.
Critical Accounting Policies and Estimates
There have been no significant changes to the accounting policies that we believe are the most critical to an understanding of our results of operations and financial condition, which are disclosed in our most recent Form 10-K for the year ended December 31, 2016 .
Recent Accounting Standards
See Part I, Item 1, Financial Statements - Note  1 , “Accounting Policies - Accounting Pronouncements Recently Adopted and Pending Accounting Pronouncements.”

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Item 3.   Quantitative and Qualitative Disclosures About Market Risk
In the normal course of its business, the company is primarily exposed to market risk in the form of AUM market price risk, securities market risk, interest rate risk, and foreign exchange rate risk. There have not been any material changes to the company's exposures to market risks during the period ended September 30, 2017 that would require an update to the disclosures provided in the most recent Form 10-K.
AUM Market Price Risk
The company's investment management revenues are comprised of fees based on the value of AUM. Declines in the market prices of equity and fixed income securities, commodities and derivatives, or other similar financial instruments held in client portfolios could cause revenues to decline because of lower investment management fees by:
•
Causing the value of AUM to decrease.
•
Causing the returns realized on AUM to decrease (impacting performance fees).
•
Causing clients to withdraw funds in favor of investments in markets that they perceive to offer greater opportunity and that the company does not serve.
•
Causing clients to rebalance assets away from investments that the company manages into investments that the company does not manage.
•
Causing clients to reallocate assets away from products that earn higher revenues into products that earn lower revenues.

Underperformance of client accounts relative to competing products could exacerbate these factors.
Securities Market Risk
The company has investments in managed investment products that invest in a variety of asset classes. Investments are generally made to establish a track record for a new fund or investment vehicle or to hedge economically exposure to certain deferred compensation plans. The company's exposure to market risk from financial instruments measured at fair value arises from its investments.
Interest Rate Risk
Interest rate risk relates to the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The company is exposed to interest rate risk primarily through its external debt and cash and cash equivalent investments. On September 30, 2017 , the interest rates on 100.0% of the company's borrowings were fixed for a weighted average period of 10.2 years, and the company had a zero balance on its floating rate credit facility.
Foreign Exchange Rate Risk
The company has certain investments in foreign operations, whose net assets and results of operations are exposed to foreign currency translation risk when translated into U.S. Dollars upon consolidation into Invesco Ltd. During the second quarter the company extended its hedge of approximately 75% of the Pound Sterling-based operating income through December 31, 2018 . These put option contracts are set at a strike level of $1.250 based on the average daily foreign exchange rates for the applicable time period. See Part I, Item 1, Financial Statements - Note 2, “Fair Value of Assets and Liabilities,” for additional details.
The company is exposed to foreign exchange revaluation into the Condensed Consolidated Statements of Income on monetary assets and liabilities that are held by subsidiaries in different functional currencies than the subsidiaries' functional currencies. Net foreign exchange revaluation gains were $14.9 million in the nine months ended September 30, 2017 ( nine months ended September 30, 2016 : $6.9 million loss), and are included in general and administrative expenses and other gains and losses, net on the Condensed Consolidated Statements of Income. We continue to monitor our exposure to foreign exchange revaluation and have put in place net investment hedge structures discussed in Part I, Item 1, Financial Statements, Note 6 -- "Other Comprehensive Income/(Loss)."

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Item 4.   Controls and Procedures
Our management is responsible for establishing and maintaining disclosure controls and procedures that are designed to ensure that information the company is required to disclose in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in the reports that the company files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
We have evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures as of September 30, 2017 . There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
We have evaluated any change in our internal control over financial reporting that occurred during the three months ended September 30, 2017 and have concluded that there was no change that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


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PART II. OTHER INFORMATION
Item 1.   Legal Proceedings
See Part I, Item I, Note 11 , "Commitments and Contingencies - Legal Proceedings," for information regarding legal proceedings.
Item 1A.   Risk Factors
The company has had no significant changes in its risk factors from those previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2016, except as noted below.

Our independent registered public accounting firm has advised us that it identified an issue related to an independence requirement contained in the Securities Exchange Act of 1934 regulations regarding auditor independence.
In May 2016, PricewaterhouseCoopers LLP (PwC) advised the company that it had identified an issue related to its independence under Rule 2-01(c)(1)(ii)(A) of Regulation S-X (Loan Rule) with respect to certain of PwC’s lenders who own certain Invesco registered funds managed by certain of our wholly-owned investment adviser subsidiaries. The company and such funds are required to have their financial statements audited by a public accounting firm that qualifies as independent under various SEC rules. As discussed below, the Staff of the Securities and Exchange Commission (SEC Staff) has issued a “no-action” letter to another mutual fund complex under substantially similar circumstances that provides temporary relief for eighteen months from the date of the no-action letter issuance.
The Loan Rule prohibits accounting firms, such as PwC, from having certain financial relationships with their audit clients and affiliated entities. Specifically, the Loan Rule provides, in relevant part, that an accounting firm is not independent if it receives a loan from a lender that is a “record or beneficial owner of more than ten percent of the audit client’s equity securities.” For purposes of the Loan Rule, audit clients include all of the registered investment companies advised by affiliates of the company, as well as the company and its other subsidiaries (collectively, the Invesco Funds Complex) for which PwC also serves as independent auditor. PwC informed the company it has relationships with lenders who hold, as record owner, more than ten percent of the shares of certain funds within the Invesco Fund Complex. These relationships call into question PwC’s independence under the Loan Rule with respect to those funds, as well as all other funds in the Invesco Fund Complex and the company and its subsidiaries.
On June 20, 2016, the SEC Staff issued a “no-action” letter to another mutual fund complex (see Fidelity Management & Research Company et al., No-Action Letter ) related to the audit independence issue described above. In that letter, the SEC Staff confirmed that it would not recommend enforcement action against an audit client that relied on audit services performed by an audit firm that was not in compliance with the Loan Rule in certain specified circumstances. The circumstances described in the no-action letter are substantially similar to the circumstances that called into question PwC’s independence under the Loan Rule with respect to the Invesco Funds Complex, including the company. The company therefore believes that the Invesco Funds Complex can rely on the letter to continue to issue financial statements that are audited by PwC and we intend to do so. On September 22, 2017, the SEC Staff issued a letter extending the relief in the June 2016 no-action letter referenced above. The extension makes no changes to the circumstances in the original no-action letter and does not include a new expiration date, providing indefinite relief.
If in the future the independence of PwC is called into question under the Loan Rule by circumstances that are not addressed in the SEC Staff’s no-action letter, the company will need to take other action and incur additional costs in order for the company’s filings with the SEC containing financial statements to be deemed compliant with applicable securities laws. Such action may include obtaining the review and audit of the financial statements filed by the company by another independent registered public accounting firm. In addition, under such circumstances, the company’s eligibility to issue securities under its existing registration statements on Form S-3 and Forms S-8 may be impacted and certain financial reporting covenants with our lenders may be impacted. There could be other burdensome requirements or impacts on other entities (including registered funds) included in the Invesco Funds Complex. Such consequences could have a material adverse effect on our business, results of operations and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Repurchases of Equity Securities
The following table sets forth information regarding purchases of our common shares by us and any affiliated purchases during the three months ended September 30, 2017 :

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Month
Total Number of Shares Purchased (1)
 
Average Price Paid Per Share
 
Total Number of Shares
Purchased as Part of
Publicly Announced Plans or Programs (2)
 
Maximum Number at end of period (or Approximate
Dollar Value) of Shares
that May Yet Be Purchased
Under the Plans
or Programs (2)  (millions)
July 1-31, 2017
3,421

 
$
35.31

 
—

 

$1,643.0

August 1-31, 2017
12,102

 
$
34.00

 
—

 

$1,643.0

September 1-30, 2017
26,002

 
$
33.16

 
—

 

$1,643.0

Total
41,525

 
 
 
—

 
 

(1)
An aggregate of 41,525 shares were surrendered to us by Invesco employees to satisfy tax withholding obligations in connection with the vesting of equity awards.
(2)
At September 30, 2017 , a balance of $1,643.0 million remains available under the share repurchase authorizations approved by the Board on October 11, 2013 and July 22, 2016.
Item 6. Exhibits
Exhibit Index
3.1
3.2
10.1

10.2

31.1
31.2
32.1
32.2
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
XBRL Taxonomy Extension Definition Linkbase Document
101.PRE
XBRL Taxonomy Extension Labels Linkbase Document
101.DEF
XBRL Taxonomy Extension Presentation Linkbase Document


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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
 

 
INVESCO LTD.
October 26, 2017
/s/ MARTIN L. FLANAGAN  
 
Martin L. Flanagan 
 
President and Chief Executive Officer 
 
 
October 26, 2017
/s/ LOREN M. STARR  
 
Loren M. Starr 
 
Senior Managing Director and Chief Financial Officer 

78

Exhibit 10.1
 







Published Deal CUSIP: G4922RAE0
Published Revolver CUSIP: G4922RAF7

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of August 11, 2017

among

INVESCO FINANCE PLC,
as the Borrower
INVESCO LTD.,
as Parent
and
THE INITIAL LENDERS NAMED HEREIN,
as Initial Lenders
and
BANK OF AMERICA, N.A.,
as Administrative Agent, Swing Line Lender and an L/C Issuer,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
 and
CITIGROUP GLOBAL MARKETS INC.,
as Joint Lead Arrangers and Bookrunners
CITIBANK N.A.,
as Syndication Agent and an L/C Issuer
THE BANK OF NEW YORK MELLON ,
HSBC BANK USA, NATIONAL ASSOCIATION ,
TORONTO DOMINION (NEW YORK) LLC ,
MORGAN STANLEY SENIOR FUNDING, INC. ,
JPMORGAN CHASE BANK, N.A. ,
WELLS FARGO BANK, N.A. ,
CANADIAN IMPERIAL BANK OF COMMERCE,
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., and
GOLDMAN SACHS BANK USA
as Co-Documentation Agents







91839933_4

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Page


ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS    1
Section 1.01
Amendment and Restatement; Allocations    1
Section 1.02
Certain Defined Terms    2
Section 1.03
Computation of Time Periods    27
Section 1.04
Accounting Terms    27
Section 1.05
Letter of Credit Amounts    27
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES    27
Section 2.01
The Advances    27
Section 2.02
Making the Advances    28
Section 2.03
Letters of Credit    29
Section 2.04
Swing Line Loans    40
Section 2.05
Fees    43
Section 2.06
Termination or Reduction of the Commitments    43
Section 2.07
Repayment of Advances    44
Section 2.08
Interest on Advances    44
Section 2.09
Interest Rate Determination    45
Section 2.10
Optional Conversion of Advances    46
Section 2.11
Prepayments of Advances    46
Section 2.12
Increased Costs    48
Section 2.13
Illegality; Circumstances Affecting Availability    49
Section 2.14
Payments Generally and Computations    50
Section 2.15
Taxes    51
Section 2.16
Sharing of Payments, Etc    56
Section 2.17
Use of Proceeds    56
Section 2.18
Cash Collateral and Other Credit Support    56
Section 2.19
Increase in Commitments    58
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING    59
Section 3.01
Conditions Precedent to Effectiveness    59
Section 3.02
Conditions Precedent to Each Borrowing and Each L/C
Credit Extension
61
Section 3.03
Determinations Under Section 3.01    61

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES    62
Section 4.01
Representations and Warranties of the Parent and the Borrower    62
ARTICLE V
COVENANTS OF THE BORROWER    65
Section 5.01
Affirmative Covenants    65
Section 5.02
Negative Covenants    70
Section 5.03
Financial Covenants    75
ARTICLE VI
EVENTS OF DEFAULT    75
Section 6.01
Events of Default    75
Section 6.02
Application of Funds    79
ARTICLE VII
ADMINISTRATIVE AGENT    80
Section 7.01
Appointment and Authority    80
Section 7.02
Rights as a Lender    80
Section 7.03
Exculpatory Provisions    80
Section 7.04
Reliance by Administrative Agent    81
Section 7.05
Delegation of Duties    82
Section 7.06
Resignation of Administrative Agent    82
Section 7.07
Non-Reliance on Administrative Agent and Other Lenders    84
Section 7.08
No Other Duties, Etc    84
Section 7.09
Administrative Agent May File Proofs of Claim    84
Section 7.10
Certain ERISA Matters    85
ARTICLE VIII
MISCELLANEOUS    87
Section 8.01
Amendments, Etc    87
Section 8.02
Notices; Effectiveness; Electronic Communication    88
Section 8.03
No Waiver; Remedies    90
Section 8.04
Expenses; Indemnity; Damage Waiver    91
Section 8.05
Right of Set-off    93
Section 8.06
Successors and Assigns    94
Section 8.07
Treatment of Certain Information; Confidentiality    99
Section 8.08
Governing Law    100
Section 8.09
Execution in Counterparts    100
Section 8.10
Survival of Representations and Warranties    100

-ii-
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(continued)

Page


Section 8.11
Replacement of Lenders    100
Section 8.12
Jurisdiction, Etc    101
Section 8.13
Judgment    102
Section 8.14
Waiver of Jury Trial    103
Section 8.15
USA PATRIOT Act Notice    103
Section 8.16
Defaulting Lenders    103
Section 8.17
No Advisory or Fiduciary Relationship    106
Section 8.18
Interest Rate Limitation    106
Section 8.19
Severability    107
Section 8.20
Electronic Execution of Assignments and Certain Other
Documents
107
Section 8.21
Acknowledgement and Consent to Bail-In of EEA Financial
Institutions
107


-iii-
91839933_4


SCHEDULES
Schedule I
List of Applicable Lending Offices
Schedule 1.01
Commitments
Schedule 4.01(b)
Subsidiaries
Schedule 4.01(d)
Required Authorizations
Schedule 4.01(i)
Disclosed Litigation
Schedule 5.02(a)
Existing Liens
Schedule 8.02
Administrative Agent’s Office; Certain Addresses for Notices


EXHIBITS     Form of
Exhibit A
Note
Exhibit B-1
Advance Notice
Exhibit B-2
Swing Line Loan Notice
Exhibit C
Assignment and Assumption
Exhibit D
Parent Guaranty
Exhibit E
Opinion of U.S. Counsel for the Borrower and the Parent
Exhibit F
Opinion of U.K. Counsel for the Borrower
Exhibit G
Opinion of Bermuda Counsel for the Parent
Exhibit H
Compliance Certificate
Exhibit I    U.K. Tax Compliance Certificate


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FOURTH AMENDED AND RESTATED CREDIT AGREEMENT


This Fourth Amended and Restated Credit Agreement (the “ Agreement ”) is entered into as of August 11, 2017 among Invesco Finance PLC, a public limited company organized under the laws of England and Wales (the “ Borrower ”), Invesco Ltd., an exempted company organized under the laws of Bermuda (the “ Parent ”), the banks, financial institutions and other institutional lenders (the “ Initial Lenders ”) listed on the signature pages hereof, and Bank of America, N.A. (“ Bank of America ”), as administrative agent (the “ Administrative Agent ” or “ Agent ”) for the Lenders (as hereinafter defined) and as Swing Line Lender and an L/C Issuer (each as hereinafter defined), hereby agree as follows:
PRELIMINARY STATEMENT
A.    The Borrower, the Parent, the lenders party thereto (the “ Existing Lenders ”) and Bank of America, as Administrative Agent thereunder, entered into that certain Third Amended and Restated Credit Agreement dated as of August 7, 2015 (the “ Existing Credit Agreement ”).
B.    The Borrower has requested that the Existing Credit Agreement be amended and restated on the terms and conditions contained in this Agreement.
C.    The Borrower, the Parent, the Initial Lenders and the Administrative Agent have agreed to and desire to amend and restate the Existing Credit Agreement on the terms and conditions set forth in this Agreement (the “ Amendment and Restatement ”).
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS
Section 1.01      Amendment and Restatement; Allocations . In order to facilitate the Amendment and Restatement and otherwise to effectuate the desires of the Borrower, the Parent, the Initial Lenders, the Administrative Agent, the L/C Issuers and the Swing Line Lender:
(a)      The Borrower, the Guarantor, the Initial Lenders, the Administrative Agent, the L/C Issuers and the Swing Line Lender hereby agree that upon the effectiveness of this Agreement, the terms and provisions of the Existing Credit Agreement which in any manner govern or evidence the Obligations, the obligations of the Borrower and the Guarantor, the rights and interests of the Initial Lenders, the Administrative Agent, the L/C Issuers, if applicable, and the Swing Line Lender and any terms, conditions or matters related to any thereof, shall be and hereby are amended and restated in their entirety by the terms, conditions and provisions of this Agreement, and the terms and provisions of the Existing Credit Agreement, except as otherwise expressly provided herein, shall be superseded by this Agreement.
(b)      Notwithstanding this Amendment and Restatement, including anything in this Section 1.01 and any related Loan Documents (as such term is defined in the Existing Credit Agreement and referred to herein, individually or collectively, as the “ Existing Credit

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Documents ”), (i) all of the indebtedness, liabilities and obligations owing by any Person under the Existing Credit Agreement and other Existing Credit Documents shall continue as Obligations hereunder, and (ii) each of this Agreement and the Notes and any other Loan Documents (as defined herein) that is amended and restated in connection with this Agreement is given as a substitution of and modification of, and not as a payment of or novation of, the indebtedness, liabilities and obligations of the Borrower under the Existing Credit Agreement or any Existing Credit Document, and neither the execution and delivery of such documents nor the consummation of any other transaction contemplated hereunder is intended to constitute a novation of the Existing Credit Agreement or of any of the other Existing Credit Documents or any obligations thereunder. Upon the effectiveness of this Agreement, all Advances (as defined in the Existing Credit Agreement, and including all Swing Line Loans thereunder) owing by the Borrower and outstanding under the Existing Credit Agreement (collectively, the “ Existing Advances ”) shall continue as Advances hereunder and shall constitute advances hereunder. Base Rate Advances under the Existing Credit Agreement shall accrue interest at the Base Rate hereunder and the parties hereto agree that the Interest Periods for all Eurocurrency Rate Advances outstanding under the Existing Credit Agreement on the Effective Date shall remain in effect without renewal, interruption or extension as Eurocurrency Rate Advances under this Agreement and accrue interest at the Eurocurrency Rate hereunder.
(c)      Simultaneously with the Effective Date, (i) the Commitments (as defined in the Existing Credit Agreement) of each of the Existing Lenders and the outstanding amount of all Existing Advances shall be reallocated in accordance with the Commitments of the Initial Lenders set forth on Schedule 1.01 , and the requisite assignments shall be deemed to be made in amounts from each Existing Lender to each Initial Lender, with the same force and effect as if such assignments were evidenced by the applicable Assignments and Assumptions (as defined in the Existing Credit Agreement) under the Existing Credit Agreement but without the payment of any related assignment fee, and no other documents or instruments shall be, or shall be required to be, executed in connection with such assignments (all of which such requirements are hereby waived), and (ii) each assignee Lender shall make full cash settlement with each corresponding assignor Lender, either directly or through the Administrative Agent, as the Administrative Agent may direct or approve, with respect to all such assignments and reallocations; and
(d)      Simultaneously with the Effective Date and after giving effect to the assignments and reallocations contemplated by Section 1.01(c) , the Commitments of each of the Initial Lenders shall be as set forth on Schedule 1.01 .
Section 1.02      Certain Defined Terms . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
“ Adjusted Debt ” outstanding on any date means the sum, without duplication, of (a) the aggregate principal amount of all Debt of the Parent and its Subsidiaries, on a Consolidated basis, outstanding on such date of the kinds referred to in clauses (a), (c), (d), (e), (f) and (h) (exclusive in clause (h) of the Debt of the kind referred to in clauses (b) and (g)) of the definition of “Debt” and (b) the aggregate principal amount of all Debt of the Parent and its Subsidiaries, on a Consolidated basis, outstanding on such date of the kinds referred to in clause (i) of the definition of Debt that relates to Debt of other Persons of the kinds referred to in clauses (a), (c), (d), (e), (f) and (h) (exclusive in clause

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(h) of the Debt of the kind referred to in clauses (b) and (g)), of the definition of “Debt”. Notwithstanding anything to the contrary in this Agreement, for purposes of determining the amount of Adjusted Debt at any time, the consolidation of Excluded Consolidated Entities shall be disregarded.
“ Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 8.02 , or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.
“ Advance ” means an advance by a Lender to the Borrower as part of a Borrowing and, unless such Borrowing is a Swing Line Loan, refers to a Base Rate Advance or a Eurocurrency Rate Advance (each of which shall be a “ Type ” of Advance), and, as the context may require, includes an advance of a Swing Line Loan by the Swing Line Lender to the Borrower.
“ Advance Notice ” means a notice of (a) a Borrowing, (b) a Conversion of Advances from one Type to the other, or (c) a continuation of Eurocurrency Rate Advance, pursuant to Section 2.02(a) , which shall be substantially in the form of Exhibit B-1 or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.
“ Affiliate ” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to vote 10% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise.
“ Applicable Lending Office ” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of a Base Rate Advance and such Lender’s Eurocurrency Lending Office in the case of a Eurocurrency Rate Advance.
“ Applicable Margin for Base Rate Advances ” means, as of any date, the greater of (i) 0.00% and (ii) the Applicable Margin for Eurocurrency Rate Advances less 1.00%.
“ Applicable Margin for Eurocurrency Rate Advances ” means, as of any date, the percentages per annum based upon the Debt Rating as set forth below:
Pricing Level
Debt   Rating
Applicable Margin for Eurocurrency Rate Advances
1
>  AA-/Aa3
0.750%
2
A+/A1
0.875%
3
A/A2
1.000%
4
A-/A3
1.125%

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Pricing Level
Debt   Rating
Applicable Margin for Eurocurrency Rate Advances
5
BBB+/Baa1
1.250%
6
<  BBB/Baa2
1.500%

Where,
“ Debt Rating ” means, as of any date of determination, the higher of the rating as determined by either S&P or Moody’s (collectively, the “ Debt Ratings ”) of (i) the Parent’s non-credit-enhanced, senior unsecured long-term debt, and (ii) the Borrower’s non-credit-enhanced (except as guaranteed by any Loan Party or including any Loan Party as a co-borrower or co-issuer), senior unsecured long-term debt; in any case, provided that when calculating the Debt Rating for each of the Parent and the Borrower, (a) if the respective Debt Ratings issued by the foregoing rating agencies for either entity differ by one level, then the higher of such Debt Ratings shall apply with respect to such entity (with the Debt Rating for Pricing Level 1 being the highest and the Debt Rating for Pricing Level 5 being the lowest); (b) if there is a split in Debt Ratings for either entity of more than one level, then the Debt Rating that is one level lower than the higher Debt Rating shall apply for such entity; (c) if only one Debt Rating is provided for either entity, such Debt Rating shall apply for such entity; and (d) if no Debt Ratings exist for either entity, Pricing Level 6 shall apply.
Initially, the Applicable Margin for Eurocurrency Rate Advances shall be determined based upon the Debt Rating specified in the certificate delivered pursuant to Section 3.01(c)(x) . Thereafter, each change in the Applicable Margin for Eurocurrency Rate Advances resulting from a publicly announced change in the Debt Rating shall be effective during the period commencing on the date of the public announcement thereof and ending on the date immediately preceding the effective date of the next such change.
“ Applicable Percentage ” means, as of any date, a percentage per annum determined by reference to the Debt Rating applicable on such date as set forth below:
Debt   Rating
Applicable Percentage
>  AA-/Aa3
0.080%
A+/A1
0.100%
A/A2
0.125%
A-/A3
0.150%
BBB+/Baa1
0.175%
<  BBB/Baa2
0.225%

Initially, the Applicable Percentage shall be determined based upon the Debt Rating specified in the certificate delivered pursuant to Section 3.01(c)(x) . Thereafter, each change in the Applicable Percentage resulting from a publicly announced change in the Debt Rating shall be effective during the period commencing on the date of the public announcement thereof and ending on the date immediately preceding the effective date of the next such change.

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“ Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“ Arrangers ” means Merrill Lynch, Pierce, Fenner & Smith, Incorporated (or any other registered broker-dealer wholly-owned by Bank of America Corporation to which all or substantially all of Bank of America Corporation’s or any of its subsidiaries’ investment banking, commercial lending services or related businesses may be transferred following the date of this Agreement), in its capacity as a joint lead arranger, and the other entities listed as Joint Lead Arrangers on the cover page hereto.
“ Assignee Group ” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.
“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.06(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit C or any other form (including electronic documentation generated by MarkitClear or other electronic platform) approved by the Administrative Agent.
“ Audited Financial Statements ” means the audited Consolidated balance sheet of the Parent and its Subsidiaries for the fiscal year ended December 31, 2016 and the related Consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Parent and its Subsidiaries, including the notes thereto, filed with the Securities and Exchange Commission.
“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“ Bank of America ” has the meaning specified in the recital of parties to this Agreement.
“ Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus ½ of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate”, and (c) the Eurocurrency Rate for an Interest Period of one month plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change (i) in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of

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such change, and (ii) in the Eurocurrency Rate described in clause (c) above shall take effect on the date of such change.
“ Base Rate Advance ” means an Advance that bears interest based on the Base Rate. All Base Rate Advances shall be denominated in Dollars.
“ Benefit Plan ” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Internal Revenue Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Internal Revenue Code) the assets of any such “employee benefit plan” or “plan”.
“ Borrower ” has the meaning specified in the recital of parties to this Agreement.
“ Borrowing ” means a borrowing consisting of simultaneous Advances of the same Type, and in the case of Eurocurrency Rate Advances, having the same Interest Period, made by each of the Lenders pursuant to Section 2.01 or a Swing Line Borrowing, or both, as the context may require.
“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office with respect to Obligations denominated in Dollars is located and if such day relates to any interest rate settings as to a Eurocurrency Rate Advance, any fundings, disbursements, settlements and payments in respect of any such Eurocurrency Rate Advance, or any other dealings to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Advance, means any such day that is also a London Banking Day.
“ Capital Leases ” means all leases that have been or should be, in accordance with GAAP, recorded as capital leases.
“ Cash Collateralize ” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of any L/C Issuer or the Lenders, as collateral for L/C Obligations or obligations of Lenders to fund participations in respect thereof (as the context may require) cash or deposit account balances or, if the L/C Issuer benefitting from such collateral shall agree in its sole discretion, other credit support constituting Cash Equivalents, in each case pursuant to documentation in form and substance reasonably satisfactory to (a) the Administrative Agent and (b) the applicable L/C Issuer. “ Cash Collateral ” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support. All Cash Collateral shall be denominated in Dollars or the Equivalent in Dollars of Sterling with respect to Cash Collateral related to Obligations denominated in Sterling, except as otherwise provided herein.
“ Cash Equivalents ” means, at any time (a) debt issued or guaranteed by the United States government or any agency thereof, maturing not more than 90 days after such time, (b)    commercial paper, maturing not more than 90 days from the date of issue, which is issued by a corporation (other than an Affiliate of the Parent) rated at least A-1

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by S&P or P-1 by Moody’s, (c) any certificate of deposit, maturing not more than 90 days after the date of issue, which is issued by a financial institution which is rated at least A- by S&P or A3 by Moody’s, and (d) investments in money market funds that invest substantially all of their assets in Cash Equivalents of the types described in clauses (a) through (c) above.
“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“ Citibank ” means Citibank N.A.
“ Commitment ” means, as to any Lender, the Dollar amount set forth opposite its name on Schedule 1.01 or, if such Lender has entered into any Assignment and Assumption, the Dollar amount set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.06(c) , as such amount may be adjusted from time to time in accordance with this Agreement.
“ Commitment Fee ” has the meaning specified in Section 2.05(a) .
“ Commitment Fee Payment Date ” has the meaning specified in Section 2.05(a) .
“ Compliance Certificate ” means a compliance certificate in the form of Exhibit H attached hereto.
“ Consolidated ” refers to the consolidation of accounts in accordance with GAAP. When the term “Consolidated” is used with respect to the Parent and its Subsidiaries, whether in a reference to Consolidated financial statements or in respect to the determination of an amount for the Parent and its Subsidiaries on a Consolidated basis or similar reference, the term “Subsidiaries” includes Excluded Subsidiaries and shall be deemed also to include each entity that is not otherwise a Subsidiary of the Parent, the accounts of which are required to be consolidated by the Parent pursuant to FASB ASC 810.
“ Convert ”, “ Conversion ” and “ Converted ” each refers to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.09 , 2.10 or 2.13 , and with respect to any Eurocurrency Rate Advance in Sterling that is Converted

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into a Base Rate Advance pursuant to any such Section, includes a conversion of such amount of Sterling into Dollars based upon the Equivalent in Dollars of Sterling.
“ Debt ” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than (i) trade payables and other current accruals incurred in the ordinary course of such Person’s business and payable on customary terms and (ii) earn-out obligations), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though 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) (other than trade payables incurred in the ordinary course of such Person’s business and payable on customary terms), (e) all obligations of such Person as lessee under Capital Leases, (f) all obligations, contingent or otherwise, of such Person in respect of acceptances, letters of credit or similar extensions of credit, (g) all net payment obligations of such Person in respect of Hedge Agreements on the date of determination, (h) all Debt of others referred to in clauses (a) through (g) above or clause (i) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through a written agreement (1) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (4) otherwise to assure a creditor against loss, and (i) all Debt referred to in clauses (a) through (h) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt, but with respect to such Debt that is non-recourse, only to the extent of the lesser of the amount of such Debt or the fair market value of the property at the time of determination that is encumbered by such Lien, provided that, in no event shall “Debt” include any obligations of the Parent or any of its Subsidiaries incurred in connection with any securitization program described in Section 5.02(c)(ii) . For purposes of clause (g) above, the amount of any net payment obligations in respect of Hedge Agreements on any date of determination shall be deemed to be the Hedge Termination Value thereof as of such date.
“ Debt/EBITDA Ratio ” means, as of any date of determination, the ratio of (a) Adjusted Debt (excluding (i) Subsidiary Non-Recourse Debt, (ii) so long as the Parent and its Subsidiaries own 100% of the Office Equipment Sale and Leaseback Bonds, liabilities with respect to the Office Equipment Sale and Leaseback Lease, (iii) the Qualified Equity Portion of Qualified Securities to the extent such amount is otherwise included in Adjusted Debt and (iv) Permitted Unit Investment Trust Debt to the extent (A) such Permitted Unit Investment Trust Debt has not been outstanding for longer than five (5) consecutive Business Days after the incurrence thereof and (B) the assets of the

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unit investment trust Subsidiary incurring such Permitted Unit Investment Trust Debt equal or exceed the amount of such Permitted Unit Investment Trust Debt; provided , that if the assets of such unit investment trust Subsidiary do not equal or exceed the amount of such Permitted Unit Investment Trust Debt, the amount of Permitted Unit Investment Trust Debt included in the calculation of Adjusted Debt shall be limited to any such insufficient amount incurred as Adjusted Debt under Section 5.02(g)) , to (b) EBITDA (excluding for purpose of this calculation of EBITDA only that portion of EBITDA attributable to the net income, expenses, losses, charges and gains of each Special Purpose Subsidiary) for each period of four consecutive fiscal quarters of the Parent ended on or immediately prior to such time.
“ Debt Rating ” has the meaning specified in the definition of Applicable Margin for Eurocurrency Rate Advances.
“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.
" Defaulting Lender " means, subject to Section 8.16(b) , any Lender that, as determined by the Administrative Agent, (a) has failed to perform any of its funding obligations hereunder, including in respect of its Advances or participations in respect of Letters of Credit or Swing Line Loans, within three Business Days of the date required to be funded by it hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, (b) has notified the Borrower, or the Administrative Agent or any Lender that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after request by the Administrative Agent, to confirm in a manner satisfactory to the Administrative Agent that it will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under the bankruptcy code of the United States or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment, or (iv) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a

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Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of the courts of the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.18(b) ) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrower, the L/C Issuers, the Swing Line Lender and each other Lender promptly following such determination.
“ Default Subsidiary ” means (a) the Borrower, (b) each Finance Subsidiary, and (c) each other Subsidiary of the Parent to which (i) 10% of EBITDA is attributable on an individual basis (including any Equity Interest owned by such Subsidiary) for the four consecutive fiscal quarters of the Parent most recently ended or (ii) 10% of the Consolidated total assets of the Parent is attributable on an individual basis (including any Equity Interest owned by such Subsidiary), in each case, determined by reference to the financial statements most recently delivered pursuant to Section 5.01(h) .
“ Designated Jurisdiction ” means any country that itself is specifically targeted by a sanctions program identified on the list maintained by OFAC and available at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx, or any successor list maintained by, or as otherwise published from time to time by, OFAC.
“ Disclosed Litigation ” has the meaning specified in Section 4.01(i) .
“ Disinterested Director ” shall mean, with respect to any Person and transaction, a member of the board of directors of such Person who does not have any material direct or indirect financial, ownership, or other beneficial interest in or with respect to such transaction or any party to such transaction other than such Person.
“ Dollars ” and the “ $ ” sign each means lawful money of the United States of America.
“ Domestic Lending Office ” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” opposite its name on Schedule I hereto or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent.
“ EBITDA ” means, for any period, net income (or net loss) of the Parent and its Subsidiaries, on a Consolidated basis excluding consolidated investment products plus the sum of (a) interest expense, (b) income tax expense, (c) depreciation expense, (d) amortization expense, (e) extraordinary losses, (f) exceptional losses, and (g) all non-cash charges exclusive of any non-cash charge to the extent it represents a reserve for cash

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expenditures in any future period, minus (x) extraordinary gains and (y) exceptional gains, in each case determined in accordance with GAAP for such period, and (z) all non-cash gains exclusive of gains for which the Parent expects cash proceeds in a future period; provided , that, for purposes of calculating EBITDA for the Parent and its Subsidiaries for any period, the EBITDA of any Person (or assets or division of such Person) acquired by the Parent or any of its Subsidiaries during such period shall be included on a pro forma basis for such period (assuming the consummation of such acquisition occurred on the first day of such period).
“ EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“ EEA Resolution Authority ” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“ Effective Date ” has the meaning specified in Section 3.01 .
“ Eligible Assignee ” means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person), subject to such consents as may be required under Section 8.06(b)(iii) ; provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Parent, the Borrower or any of the Parent’s Affiliates or Subsidiaries; and provided further , however , that an Eligible Assignee shall include only a Lender, an Affiliate of a Lender or another Person, which, through its lending offices, is capable of lending Sterling to the Borrower without the imposition of any additional Indemnifiable Taxes.
“ Environmental Laws ” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.
“ Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, and all of the other

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ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“ Equivalent” means, at any time, (a) with respect to any amount denominated in Dollars, the equivalent amount thereof in Sterling as determined by the Administrative Agent or the applicable L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Sterling with Dollars, and (b) with respect to any amount denominated in Sterling, the equivalent amount thereof in Dollars as determined by the Administrative Agent or the applicable L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with Sterling.
 
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.
“ ERISA Affiliate ” means any Person that for purposes of Title IV of ERISA is a member of any Loan Party’s controlled group, or under common control with any Loan Party, within the meaning of Section 414 (b) or (c) of the Internal Revenue Code or, for purposes of Section 412 and 430 of the Internal Revenue Code, under Section 414(m) or (o) of the Internal Revenue Code.
“ ERISA Event ” means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) at the time when the requirements of subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are applicable to any Loan Party or any ERISA Affiliate an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to a Plan within the following 30 days; (b) the filing by any Loan Party or any ERISA Affiliate of an application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan or Multiemployer Plan of a notice of intent to terminate such Plan or Multiemployer Plan pursuant to Section 4041 or 4041A of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of any Loan Party or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for the imposition of a lien under Section 303(k) of ERISA on the assets of any Loan Party or any ERISA Affiliate shall have been met with respect to any Plan; (g) the adoption of an amendment to a Plan requiring any Loan Party or any ERISA Affiliate to provide security to such Plan pursuant to Section 436(f) of the Internal Revenue Code; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to

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administer, a Plan, provided , however, that the event or condition set forth in Section 4042(a)(4) of ERISA shall be an ERISA Event only if the PBGC has notified any Loan Party or any ERISA Affiliate that it has made a determination under such section or that it is considering termination of a Plan on such grounds.
“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“ Eurocurrency Base Rate ” has the meaning specified in the definition of Eurocurrency Rate.
“ Eurocurrency Lending Office ” means, with respect to any Lender, the office of such Lender specified as its “Eurocurrency Lending Office” opposite its name on Schedule I hereto or in the Assignment and Assumption pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent.
“ Eurocurrency Rate ” means for any Interest Period with respect to a Eurocurrency Rate Advance, a rate per annum determined by the Administrative Agent pursuant to the following formula:
Eurocurrency Rate =
Eurocurrency Base Rate
1.00 – Eurocurrency Reserve Percentage

Where,
“ Eurocurrency Base Rate ” means, for such Interest Period:
(a)    with respect to each Eurocurrency Rate Advance, the rate per annum equal to the London Interbank Offered Rate (“ LIBOR ”) or a comparable or successor rate which rate is approved in good faith by the Administrative Agent, as published on the applicable Bloomberg screen (or other commercially available source providing quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 A.M. (London time), two Business Days prior to the commencement of such Interest Period, for deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period;
(b)    for any interest calculation with respect to a Base Rate Advance on any date, the rate per annum equal to LIBOR or a comparable or successor rate which rate is approved in good faith by the Administrative Agent, as published on the applicable Bloomberg screen (or other commercially available source providing quotations as may be designated by the Administrative Agent from time to time), at approximately 11:00 a.m. (London time) determined two Business

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Days prior to such date for Dollar deposits with a term of one month commencing that day;
provided that to the extent a comparable or successor rate is approved in good faith by the Administrative Agent in connection with any rate set forth in this definition, the approved rate shall be applied in a manner consistent with market practice; provided , further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent; and if the Eurocurrency Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.
“ Eurocurrency Reserve Percentage ” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”). The Eurocurrency Rate for each outstanding Eurocurrency Rate Advance shall be adjusted automatically as of the effective date of any change in the Eurocurrency Reserve Percentage.
“ Eurocurrency Rate Advance ” means an Advance that bears interest at a rate based on clause (a) of the definition of Eurocurrency Base Rate. Eurocurrency Rate Advances may be denominated in Dollars or Sterling. All Advances denominated in Sterling must be Eurocurrency Rate Advances.
“ Events of Default ” has the meaning specified in Section 6.01 .
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
“ Excluded Consolidated Entity ” means any Person that is (a) an Excluded Subsidiary or (b) a Person not otherwise a Subsidiary of the Parent that is required to be consolidated with the accounts of the Parent pursuant to FASB ASC 810.
“ Excluded Subsidiary ” means any Person otherwise a Subsidiary of the Parent that is (a) an investment company, investment fund, investment vehicle or other Person for which the Parent or any of the Parent’s Subsidiaries is a sponsor, manager or adviser, (b) any direct or indirect Subsidiary of a Person described in the foregoing clause (a) , or (c) any Subsidiary of the Parent that owns an interest directly or indirectly in any of the types of Persons described in clauses (a) or (b) above (including interests in the general partner, managing member or other similar entity of such Person) and has only nominal assets other than the interest in the Persons described in this clause (c) , whether or not, in the case of each of clauses (a) , (b) and (c) , any of the foregoing are Consolidated in the Parent’s financial statements. For purposes of this definition, the term “Subsidiary”, as used herein, means a Subsidiary as defined in the first sentence of the definition thereof.

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“ Existing Credit Agreement ” has the meaning specified in the preliminary statement to this Agreement.
“ Existing Debt ” means the Debt of the Parent and its Subsidiaries, on a Consolidated basis outstanding as of the Effective Date.
“ FASB ASC ” means the Accounting Standards Codification of the Financial Accounting Standards Board.
“ FATCA ” means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any intergovernmental agreements and any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code.
“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent, and (c) if the Federal Funds Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.
“ Fee Letter ” means the letter agreement, dated July 19, 2017, among the Borrower, the Parent, the Administrative Agent and Merrill Lynch, Pierce, Fenner and Smith Incorporated.
“ Finance Subsidiary ” has the meaning specified in Rule 3-10(h)(7) of Regulation S-X promulgated under the Securities Act, as in effect on the date hereof.
“ Fronting Exposure ” means, at any time there is a Defaulting Lender, (a) with respect to any L/C Issuer, such Defaulting Lender's Pro Rata Share Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender's participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender's Pro Rata Share Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender's participation obligation has been reallocated to other Lenders in accordance with the terms hereof.
“ Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.


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“ GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable, subject to Section 1.04(b) hereof, to the circumstances as of the date of determination, consistently applied.
“ Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“ Guarantor ” means the Parent.
“ Guaranty ” means the Parent Guaranty.
“ Hedge Agreements ” means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements.
“ Hedge Termination Value ” means, in respect of any one or more Hedge Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Agreements, (a) for any date on or after the date such Hedge Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a) , the amount(s) determined as the mark-to-market value(s) for such Hedge Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedge Agreements.
" Indemnifiable Taxes " has the meaning specified in Section 2.15(a) .
“ Initial Lenders ” has the meaning specified in the recital of parties to this Agreement.
“ Insufficiency ” means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
“ Interest Period ” means, for each Eurocurrency Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurocurrency Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurocurrency Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, with respect to Eurocurrency Rate Advances, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant

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to the provisions below. The duration of each such Interest Period for each Eurocurrency Rate Advance shall be one, two, three or six months, as the Borrower may, upon notice received by the Administrative Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided , however , that:
(i)    the Borrower may not select any Interest Period that ends after the Termination Date;
(ii)    Interest Periods commencing on the same date for Eurocurrency Rate Advances comprising part of the same Borrowing shall be of the same duration;
(iii)    whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided , however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and
(iv)    whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.
“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury regulations promulgated and administrative rulings issued thereunder.
“ ISP ” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).
“ Issuer Documents ” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the applicable L/C Issuer and the Borrower (or any Subsidiary) or in favor of such L/C Issuer and relating to such Letter of Credit.
“ L/C Advance ” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Pro Rata Share Percentage. All L/C Advances shall be denominated in Dollars.
“ L/C Borrowing ” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing. All L/C Borrowings shall be denominated in Dollars.


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“ L/C Credit Extension ” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“ L/C Issuer ” means (i) Bank of America in its capacity as issuer of Letters of Credit hereunder, (ii) Citibank in its capacity as issuer of Letters of Credit hereunder, and (iii) any successor issuer of Letters of Credit hereunder.
“ L/C Obligations ” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including, without duplication, all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.05 . For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“ Lenders ” means the Initial Lenders and each Person that shall become a party hereto pursuant to Section 8.06 , and as the context requires, includes the Swing Line Lender.
“ Letter of Credit ” means any standby letter of credit issued hereunder.
“ Letter of Credit Application ” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the applicable L/C Issuer.
“ Letter of Credit Expiration Date ” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day), except as otherwise provided herein.
“ Letter of Credit Fee ” has the meaning specified in Section 2.03(h) .
“ Letter of Credit Sublimit ” means an amount equal to $50,000,000 in the aggregate, which such amount shall be allocated between the L/C Issuers such that it shall equal, as to Bank of America, $25,000,000 and, as to Citibank, $25,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the Total Commitments.
“ Lien ” means any lien, security interest or other charge or encumbrance of any kind, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.
“ Loan Documents ” means this Agreement, the Notes, the Parent Guaranty, each Issuer Document, and any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.18 of this Agreement.
“ Loan Parties ” means, collectively, the Borrower and the Guarantor (each individually, a “ Loan Party ”).

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“ London Banking Day ” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.
“ Material Adverse Change ” means any material adverse change in the business, financial condition, operations, performance or properties of the Parent and its Subsidiaries taken as a whole.
“ Material Adverse Effect ” means a material adverse effect on (a) the business, financial condition, operations, performance or properties of the Parent and its Subsidiaries taken as a whole, (b) the rights and remedies of the Administrative Agent or any Lender under this Agreement or any Note or (c) the ability of the Borrower to pay its obligations under this Agreement or any Note.
“ Maturity Date ” means August 11, 2022.
“ Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.
“ Multiemployer Plan ” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.
“ Multiple Employer Plan ” means a Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
“ Non-Loan Party Finco ” means any Finance Subsidiary that, at the time of determination, is not a Loan Party.
“ Note ” means a promissory note, or as requested by any Lender, an amended and restated promissory note, of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A hereto, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Advances made by such Lender, as it may be amended, restated or modified from time to time, or any substitute therefor or replacement thereof.
“ Obligations ” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower arising under any Loan Document, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower of any proceeding under the bankruptcy code of the United States or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally naming the Borrower as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.


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“ OFAC ” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“ Office Equipment Sale and Leaseback ” means the sale and leaseback transaction pursuant to which Invesco Group Services, Inc. sold office equipment for its Atlanta, Georgia headquarters facility to the Development Authority of Fulton County for an aggregate price not in excess of $20,000,000 and then leased back such office equipment from the Development Authority of Fulton County.
“ Office Equipment Sale and Leaseback Bonds ” means those certain industrial revenue bonds issued by the Development Authority of Fulton County for the purpose of financing the purchase by the Development Authority of Fulton County of that certain office equipment the subject matter of the Office Equipment Sale and Leaseback.
“ Office Equipment Sale and Leaseback Lease ” the lease by Invesco Group Services, Inc. of that certain office equipment subject to the Office Equipment Sale and Leaseback from the Development Authority of Fulton County.
" Other Taxes " has the meaning specified in Section 2.15(b) .
“ Outstanding Amount ” means (i) with respect to Advances and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Advances and Swing Line Loans, as the case may be, occurring on such date, and (ii) with respect to L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursement by the Borrower of Unreimbursed Amounts. For Advances and L/C Obligations denominated in Sterling, for purposes of determining the Outstanding Amount thereof, such amount shall be the Equivalent thereof in Dollars.
“ Overnight Rate ” means, for any day, (a) with respect to any amount denominated in Dollars, the greater of (i) the Federal Funds Rate and (ii) an overnight rate determined by the Administrative Agent or the Swing Line Lender, as the case may be, in accordance with banking industry rules on interbank compensation, and (b) with respect to any amount denominated in Sterling, the rate of interest per annum at which overnight deposits in Sterling, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by a branch or Affiliate of Bank of America in the applicable offshore interbank market for such currency to major banks in such interbank market.
“ Parent ” has the meaning specified in the recital of parties to this Agreement.
“ Parent Guaranty ” means that certain Fourth Amended and Restated Guaranty dated as of the date hereof executed and delivered by the Parent in favor of the Administrative Agent and the Lenders in substantially the form of Exhibit D , as amended, supplemented or otherwise modified from time to time.


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“ PBGC ” means the Pension Benefit Guaranty Corporation (or any successor).
“ Permitted Liens ” means the following: (a) Liens for taxes, assessments or other governmental charges being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and for which such reserves or other appropriate provision, if any, as shall be required by GAAP shall have been made and maintained in accordance with GAAP and past practices of the Parent and its Subsidiaries therefor and as to which any enforcement, collection, execution, levy or foreclosure proceeding which shall commence or have commenced could not reasonably be expected to result in a Material Adverse Effect; (b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due or being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and for which such reserves or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor and as to which any enforcement, collection, execution, levy or foreclosure proceeding which shall commence or have commenced could not reasonably be expected to result in a Material Adverse Effect; (c) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business (i) in connection with workers’ compensation, unemployment insurance and other types of social security, (ii) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property, or (iii) in connection with the cash collateralization of letters of credit permitted under Section 5.02(g)(iii) ; (d) any Liens securing attachments or judgments unless the judgment it secures results or has resulted in an Event of Default under Section 6.01(f) ; and (e) leases or subleases granted to others, easements, rights of way and other encumbrances on title to real property that, in the case of any property material to the operation of the business of the Parent and its Subsidiaries taken as a whole, do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes.
“ Permitted Unit Investment Trust Debt ” means Debt of Invesco Capital Markets, Inc. or any other Subsidiary that is a sponsor of a unit investment trust, in an amount of up to $400,000,000 in the aggregate to support settlement obligations with The Depository Trust Company (or other Person performing similar clearing and/or settlement services) in connection with Invesco Capital Markets, Inc.’s or such other Subsidiary’s trading operations of a sponsored unit investment trust to the extent such trading operations are permitted by applicable Governmental Authorities.
“ Person ” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.
“ Plan ” means a Single Employer Plan or a Multiple Employer Plan.


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“ Platform ” has the meaning specified in Section 5.01 .
“ Pro Rata Share ” of any amount means, with respect to any Lender at any time, the product of such amount times such Lender’s Pro Rata Share Percentage at such time.
“ Pro Rata Share Percentage ” means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) obtained by dividing such Lender’s Commitment at such time by the Total Commitments at such time, subject to adjustment as provided in Section 8.16 . If the Commitment of each Lender and the obligations of each L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 6.02 or if the Total Commitments have expired, then the Pro Rata Share Percentage of each Lender shall be determined based on the Pro Rata Share Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Pro Rata Share Percentage of each Lender is set forth opposite the name of such Lender on Schedule 1.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
“ PTE ” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“ Qualified Equity Portion of Qualified Securities ” means at any time, the sum of the amounts obtained by multiplying (x) the amount of each Qualified Security by (y) the Qualified Equity Percentage at such time of such Qualified Security.
“ Qualified Equity Percentage ” means, with respect to a Qualified Security, the lowest percentage (whether specifically stated or implied through calculation) accorded equity treatment for such Qualified Security by either S&P or Moody’s, as determined by such rating agencies from time to time.
“ Qualified Security ” means any security issued by the Parent or the Borrower that (i) has attributes of both debt and equity, (ii) is rated by both S&P and Moody’s, (iii) the proceeds of which are accorded a percentage of equity treatment by both S&P and Moody’s, (iv) matures after the Maturity Date, and (v) ranks in priority of repayment no higher than pari passu with, and is not structurally superior to, the senior credit facility provided to the Borrower under this Agreement and the other Loan Documents (including, without limitation, all of the Obligations).
“ Register ” has the meaning specified in Section 8.06(c) .
“ Related Parties ” means with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.
“ Relevant Taxing Authority ” means the taxing authority with which the applicable Treaty Form is required to be filed, in the country of residence of a Lender.
“ Required Lenders ” means at any time Lenders owed greater than 50% of the then aggregate unpaid principal amount of the Advances and L/C Obligations owing to

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Lenders (with the aggregate amount of each Lender’s risk participation and funded participation in Swing Line Loans and L/C Obligations being deemed owed to such Lender for purposes of this definition), or, if no such amount is then outstanding, Lenders holding greater than 50% of the Commitments provided that the portion of the aggregate unpaid principal amount of the Advances and risk participations and funded participations in Swing Line Loans and L/C Obligations owing to or deemed owed to, and the Commitment of, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
“ Responsible Officer ” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of the Parent or a Director of the Borrower and, solely for purposes of notices given pursuant to Article II , any other officer or employee of the Borrower so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the Borrower designated in or pursuant to an agreement between the Borrower and the Administrative Agent.
“ Revaluation Date ” means (a) with respect to any Advance, each of the following: (i) each date of a Borrowing of a Eurocurrency Rate Advance denominated in Sterling, (ii) each date of a continuation of a Eurocurrency Rate Advance denominated in Sterling, and (iii) such additional dates as the Administrative Agent shall determine or the Required Lenders shall require; and (b) with respect to any Letter of Credit, each of the following: (i) each date of issuance of a Letter of Credit denominated in Sterling, (ii) each date of an amendment of any such Letter of Credit having the effect of increasing the amount thereof, (iii) each date of any payment by any L/C Issuer under any Letter of Credit denominated in an Sterling, and (iv) such additional dates as the Administrative Agent or any L/C Issuer shall determine or the Required Lenders shall require.  
“ Same Day Funds ” means (a) with respect to disbursements and payments in Dollars, immediately available funds, and (b) with respect to disbursements and payments in Sterling, same day or other funds as may be determined by the Administrative Agent, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in Sterling.
“ Sanctioned Person ” means (a) a Person named on the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC available at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx, or as otherwise published from time to time, (b) a Person named on the lists maintained by the United Nations Security Council available at http://www.un.org/sc/committees/list_compend.shtml, or as otherwise published from time to time, (c) a Person named on the lists maintained by the European Union available at http://eeas.europa.eu/cfsp/sanctions/consol-list_en.htm, or as otherwise published from time to time, (d) a Person named on the lists maintained by Her Majesty’s Treasury available at http://www.hm-treasury.gov.uk/fin_sanctions_index.htm, or as otherwise published from time to time, (e) a Person that is specifically named on a list maintained by any other relevant sanctions authority of a jurisdiction in which the Borrower or any of its Subsidiaries conduct business, or (f) (i) an agency of the government of, or an

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organization controlled by, a Designated Jurisdiction, to the extent such agency or organization is subject to a sanctions program administered by OFAC, or (ii) a Person located, organized or resident in a Designated Jurisdiction, to the extent such Person is subject to a sanctions program administered by OFAC.
“ S&P ” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. and any successor thereto.
“ SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Securities Laws ” means the Securities Act, the Exchange Act, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date hereunder.
“ Significant Subsidiary ” means (a) the Borrower, (b) each Finance Subsidiary, and (c) each other Subsidiary of the Parent that (i) is organized under the laws of the United States or any political subdivision thereof or (ii) is an operating Subsidiary of the Parent or a Subsidiary of the Parent that directly or indirectly owns an operating Subsidiary of the Parent.
“ Single Employer Plan ” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that is maintained for employees of any Loan Party or any ERISA Affiliate and no Person other than any Loan Party and the ERISA Affiliates.
“ Solvent ” and “ Solvency ” mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“ Special Purpose Subsidiary ” means a Subsidiary created or acquired, and wholly owned, directly or indirectly, by the Parent whose primary business is investing in real estate properties or other investment assets, the acquisition of which properties or assets are financed in whole, or in part, with Subsidiary Non-Recourse Debt, and whose primary assets consist of such real estate properties and other investment assets.

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“ Spot Rate ” for a currency means the rate determined by the Administrative Agent or any L/C Issuer, as applicable, to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent or such L/C Issuer may obtain such spot rate from another financial institution designated by the Administrative Agent or such L/C Issuer if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency; and provided further that such L/C Issuer may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in Sterling.
“ Sterling ” means lawful money of the United Kingdom of Great Britain and Northern Ireland.
“ Subsidiary ” of any Person means any corporation, limited liability company, partnership, joint venture, trust or estate of which (or in which) more than 50% of (a) in the case of a corporation, the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) in the case of a limited liability company, partnership or joint venture, the interest in the capital or profits of such limited liability company, partnership or joint venture and (c) in the case of a trust or estate, the beneficial interest in such trust or estate, and, in each instance of (a), (b) and (c) above is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries. Unless otherwise specified, all references to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Parent but shall exclude any Person that is otherwise a Subsidiary but also an Excluded Subsidiary.
“ Subsidiary Non-Recourse Debt ” means with respect to all Special Purpose Subsidiaries of the Parent, Debt incurred by such Special Purpose Subsidiaries, (i) the proceeds of which are used to finance the acquisition of real estate properties and other investment assets by such Special Purpose Subsidiary, (ii) that is not guaranteed by the Borrower or the Parent, and (iii) where recourse for repayment of such Debt is contractually limited to such Special Purpose Subsidiary and the specific real estate properties or other investment assets of such Special Purpose Subsidiary financed with the proceeds thereof.
“ Swing Line ” means the revolving credit facility made available by the Swing Line Lender pursuant to Section 2.04 .
“ Swing Line Borrowing ” means a borrowing of a Swing Line Loan pursuant to Section 2.04 .



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“ Swing Line Lender ” means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.
“ Swing Line Loan ” has the meaning specified in Section 2.04(a) .
“ Swing Line Loan Notice ” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b) , which shall be substantially in the form of Exhibit B-2 or such other form as approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer.
“ Swing Line Sublimit ” means an amount equal to the lesser of (a) $100,000,000 and (b) the Total Commitments. The Swing Line Sublimit is part of, and not in addition to, the Total Commitment.
" Taxes " has the meaning specified in Section 2.15(a) .
“ Termination Date ” means the earlier of (i) the Maturity Date and (ii) the date of termination in whole of the Commitments pursuant to Section 2.06 or 6.01 .
“ Total Commitment ” means, at any time, the aggregate amount of the Lenders’ Commitments at such time.
“ Treaty Form ” means a form of claim for the benefits of an income tax treaty between the United Kingdom and the country of residence of a Lender or the Administrative Agent, as is specified from time to time by HM Revenue & Customs in the United Kingdom.
“ Type ” has the meaning therefor in the definition of Advance.
“ Unreimbursed Amount ” has the meaning specified in Section 2.03(c)(i) .
“ VAT ” means any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112) and any other tax of a similar nature, wherever imposed.     
“ Voting Stock ” means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.
“ Withdrawal Liability ” has the meaning specified in Part I of Subtitle E of Title IV of ERISA.
“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA

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Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
Section 1.03      Computation of Time Periods . In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.
Section 1.04      Accounting Terms .
(a)      Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.
(b)      Changes in GAAP . Except as otherwise provided in the last sentence of this clause (b) , if at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower and the Parent shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding anything herein to the contrary and notwithstanding any changes in GAAP, leases shall continue to be classified and accounted for on a basis consistent with that reflected in the Audited Financial Statements for all purposes of this Agreement.
Section 1.05      Letter of Credit Amounts . Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Equivalent in Dollars of the stated amount of such Letter of Credit in effect at such time; provided , however , that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the Equivalent in Dollars of the maximum stated amount of such Letter of Credit after giving effect to all such increases and any subsequent decreases, whether or not such maximum stated amount is in effect at such time.
ARTICLE II     

AMOUNTS AND TERMS OF THE ADVANCES
Section 2.01      The Advances . Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date in an aggregate principal

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amount (based in respect of any Advance denominated in Sterling on the Equivalent in Dollars), not to exceed at any time outstanding the amount of such Lender’s Commitment less (i) such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations and (ii) such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans; provided , however , that after giving effect to any Advance, the aggregate Outstanding Amount of all Swing Line Loans (after giving effect to any repayment or prepayment thereof to occur immediately prior to or concurrently with such requested Advance, including with any portion of the proceeds thereof) plus the aggregate Outstanding Amount at such time of the Advances of the Lender acting as Swing Line Lender (including the requested Advance) plus the aggregate Outstanding Amount of such Lender’s participations in L/C Obligations shall not exceed such Lender’s Commitment. Each Borrowing shall be in an aggregate amount of $5,000,000 (or the Equivalent thereof in Sterling) or an integral multiple of $1,000,000 (or the Equivalent thereof in Sterling) in excess thereof and shall consist of Advances of the same Type made on the same day by the Lenders ratably according to their respective Commitments. Within the limits of each Lender’s Commitment, the Borrower may borrow under this Section 2.01 , prepay pursuant to Section 2.11 and reborrow under this Section 2.01 .
Section 2.02      Making the Advances . (a) Each Borrowing shall be made on notice to the Administrative Agent, which may be given by (1) telephone or (2) an Advance Notice; provided that any telephone notice must be confirmed promptly by delivery to the Administrative Agent of an Advance Notice. Each such Advance Notice must be received not later than (x) 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurocurrency Rate Advances denominated in Dollars, (y) 11:00 A.M. (New York City time) on the fifth Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurocurrency Rate Advances denominated in Sterling, or (z) 1:00 P.M. (New York City time) on the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances, by the Borrower to the Administrative Agent, which shall give to each Lender prompt notice thereof. Each Lender shall, before 1:00 P.M. (New York City time) on the date of such Borrowing for Eurocurrency Rate Advances and 2:30 P.M. (New York City time) on the date of such Borrowing for Base Rate Advances, make available for the account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent’s Office, in Same Day Funds, such Lender’s Pro Rata Share of such Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III , the Administrative Agent will make such funds available to the Borrower at the Administrative Agent’s address referred to in Section 8.02 ; provided , however , that if, on the date the Advance Notice with respect to such Borrowing is given by the Borrower, there are L/C Borrowings outstanding, then the proceeds of such Borrowing, first , shall be applied to the payment in full of any such L/C Borrowings, and second , shall be made available to the Borrower as provided above.
(b)    Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurocurrency Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than $5,000,000 (or the Equivalent thereof in Sterling) or if the obligation of the Lenders to make Eurocurrency Rate Advances shall then be suspended pursuant to Section 2.09 or 2.13 and (ii) the Eurocurrency Rate Advances may not be outstanding as part of more than ten separate Borrowings.

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(c)    Each Advance Notice shall be irrevocable and binding on the Borrower. In the case of any Borrowing that the related Advance Notice specifies is to be comprised of Eurocurrency Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Advance Notice for such Borrowing the applicable conditions set forth in Article III , including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date.
(d)    Unless the Administrative Agent shall have received notice from a Lender prior to the time of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s Pro Rata Share of such Borrowing, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, but shall have no obligation to, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such amount available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Advances comprising such Borrowing and (ii) in the case of such Lender, the Overnight Rate. If such Lender shall repay to the Administrative Agent such corresponding amount such amount so repaid shall constitute such Lender’s Advance as part of such Borrowing for purposes of this Agreement, and thereafter, the Borrower’s obligation to repay such amount to the Administrative Agent in accordance with this subsection (d) shall no longer be required; provided that the Borrower shall not be relieved of its obligation to pay the interest on such amount referred to herein unless and only to the extent that such Lender has paid the interest on such amount referred to herein.
(e)    The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.
Section 2.03      Letters of Credit .
(a)      The Letter of Credit Commitment .
(i)      Subject to the terms and conditions set forth herein, (A) each L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.03 , (1) from time to time on any Business Day during the period from the Effective Date until the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars or Sterling for the account of the Borrower or any other Subsidiary of the Parent, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the

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Lenders severally agree to participate in Letters of Credit issued for the account of Borrower or other Subsidiaries of the Parent (for the avoidance of doubt, including any Letters of Credit with an expiry date later than the Letter of Credit Expiration Date issued in accordance with Section 2.03(a)(ii)(B) below) and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit (based in respect of any Letter of Credit denominated in Sterling on the Equivalent in Dollars), (w) the Outstanding Amount of all Advances, all L/C Obligations and all Swing Line Loans shall not exceed the Total Commitment, (x) the Outstanding Amount of the Advances of any Lender plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations plus such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, (y) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit applicable to such L/C Issuer and (z) the aggregate Outstanding Amount of all Swing Line Loans (after giving effect to any repayment or prepayment thereof to occur immediately prior to or concurrently with such L/C Credit Extension) plus the aggregate Outstanding Amount at such time of the Advances of the Lender acting as Swing Line Lender plus the aggregate Outstanding Amount of such Lender’s participations in L/C Obligations (including L/C Obligations in respect of such L/C Credit Extension) shall not exceed such Lender’s Commitment. Each request by the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.
(ii)      No L/C Issuer shall issue any Letter of Credit if:
(A)      subject to Section 2.03(b)(iii) , the expiry date of the requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, provided that a requested Letter of Credit may have an expiry date that occurs more than twelve months after the date of issuance or last extension if all Lenders have approved such expiry date; or
(B)      the expiry date of the requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless (i) on or before the Letter of Credit Expiration Date, the Borrower has Cash Collateralized 100% of the undrawn amount of such Letter of Credit, such Cash Collateral to be in the same currency as the related Letter of Credit or (ii) all the Lenders have otherwise approved such expiry date.
(iii)      No L/C Issuer shall be under any obligation to issue any Letter of Credit if:
(A)      any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such L/C Issuer from

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issuing the Letter of Credit, or any law applicable to such L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such L/C Issuer shall prohibit, or request that such L/C Issuer refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon such L/C Issuer with respect to the Letter of Credit any restriction, reserve or capital requirement (for which such L/C Issuer is not otherwise compensated hereunder) not in effect on the Effective Date, or shall impose upon such L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Effective Date and which such L/C Issuer in good faith deems material to it;
(B)      the issuance of such Letter of Credit would violate one or more policies of such L/C Issuer applicable to letters of credit generally, so long as such policies are consistently applied by such L/C Issuer to its customers generally and to letters of credit issued by it, such policies are not unusual to similarly situated financial institutions and such policies are not contrary to the express contractual obligations of such L/C Issuer under this Agreement;
(C)      except as otherwise agreed by the Administrative Agent and such L/C Issuer, the Letter of Credit is in an initial stated amount less than $1,000,000;
(D)      the Letter of Credit is to be denominated in a currency other than Dollars or Sterling;
(E)      any Lender is at that time a Defaulting Lender, unless such L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to such L/C Issuer (in its sole discretion) with the Borrower or such Lender to eliminate such L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 8.16(a)(iv )) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which such L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion; or
(F)      the Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.
(iv)      No L/C Issuer shall amend any Letter of Credit if such L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof.
(v)      No L/C Issuer shall be under any obligation to amend any Letter of Credit if (A) such L/C Issuer would have no obligation at such time to issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed amendment to the Letter of Credit.
(vi)      Each L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and each L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative

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Agent in Article VII with respect to any acts taken or omissions suffered by such L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article VII included such L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuers.
(b)      Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit .
(i)      Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to any L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by an authorized signatory of the Borrower. Such Letter of Credit Application must be received by the applicable L/C Issuer and the Administrative Agent not later than 11:00 a.m. (New York City time) at least one Business Day (or such later date and time as the Administrative Agent and such L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the applicable L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; (H) the Borrower or other Subsidiary of the Parent on whose account the requested Letter of Credit is being issued; and (I) such other matters as such L/C Issuer may reasonably require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the applicable L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as such L/C Issuer may require. Additionally, the Borrower shall furnish to the applicable L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as such L/C Issuer or the Administrative Agent may reasonably require. Such Letter of Credit Application may be sent by facsimile, by United States mail, by overnight courier, by electronic transmission using the system provided by the applicable L/C Issuer, by personal delivery or by any other means acceptable to the applicable L/C Issuer.
(ii)      Promptly after receipt of any Letter of Credit Application, the applicable L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, such L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the applicable L/C Issuer has received written notice from any Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to


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the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article III shall not then be satisfied, then, subject to the terms and conditions hereof, such L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or the applicable Subsidiary or enter into the applicable amendment, as the case may be, in each case in accordance with such L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit (for the avoidance of doubt, including any Letters of Credit with an expiry date later than the Letter of Credit Expiration Date issued in accordance with Section 2.03(a)(ii)(B) ), each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Pro Rata Share Percentage times the amount of such Letter of Credit.
(iii)      If the Borrower so requests in any applicable Letter of Credit Application, the applicable L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such Auto-Extension Letter of Credit must permit such L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the applicable L/C Issuer, the Borrower shall not be required to make a specific request to such L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the applicable L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date unless on or before the Letter of Credit Expiration Date, the Borrower has complied with the requirements set forth in Section 2.03(a)(ii)(B) , in which case such expiry date shall not extend more than twelve months past the Letter of Credit Expiration Date unless all Lenders have otherwise consented thereto; provided , however , that such L/C Issuer shall not permit any such extension if (A) such L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or any Loan Party that one or more of the applicable conditions specified in Section 3.02 is not then satisfied, and in each such case directing such L/C Issuer not to permit such extension.
(iv)      Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the applicable L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

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(c)      Drawings and Reimbursements; Funding of Participations .
(i)      Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the applicable L/C Issuer shall examine the drawing documents in respect of such Letter of Credit within the period stipulated by the terms and conditions of such Letter of Credit. Such L/C Issuer shall promptly after such examination notify the Borrower and the Administrative Agent thereof of such demand for payment and whether such L/C Issuer has made payment under such Letter of Credit. In the case of a Letter of Credit denominated in Sterling, the Borrower shall reimburse the applicable L/C Issuer in Sterling, unless (A) such L/C Issuer (at its option) shall have specified in such notice that it will require reimbursement in Dollars, or (B) in the absence of any such requirement for reimbursement in Dollars, the Borrower shall have notified such L/C Issuer promptly following receipt of the notice of drawing that the Borrower will reimburse such L/C Issuer in Dollars. In the case of any such reimbursement in Dollars of a drawing under a Letter of Credit denominated in Sterling, the applicable L/C Issuer shall notify the Borrower of the Equivalent in Dollars of the amount of the drawing promptly following the determination thereof. Not later than 11:00 a.m. (New York City time) on the next Business Day succeeding payment by the applicable L/C Issuer under a Letter of Credit (each such L/C Issuer payment date, an “ Honor Date ”), the Borrower shall reimburse such L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing; provided , however , that in the event such reimbursement by the Borrower is made on the next Business Day succeeding the Honor Date, interest shall accrue on the amount of such drawing for the account of such L/C Issuer from the Honor Date until the date of such reimbursement at a rate equal to the Base Rate plus the Applicable Margin for Base Rate Advances. If the Borrower fails to so reimburse such L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (expressed in the Equivalent in Dollars thereof in the case of a Letter of Credit denominated in Sterling) (the “ Unreimbursed Amount ”), and the amount of such Lender’s Pro Rata Share thereof. In such event, the Borrower shall be deemed to have requested a Borrowing of Base Rate Advances to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount (expressed in the amount of the Equivalent in Dollars thereof in the case of any Unreimbursed Amount in Sterling), without regard to the minimum and multiples specified in Section 2.01 for the principal amount of Base Rate Advances, but subject to the unutilized portion of the Total Commitments and the conditions set forth in Section 3.02 (other than delivery by the Borrower of an Advance Notice). Any notice given by the applicable L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(ii)      Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the applicable L/C Issuer, in Dollars, at the Administrative Agent’s Office for Dollar-denominated payments in an amount equal to its Pro Rata Share of the Unreimbursed Amount not later than 1:00 p.m. (New York City time) on the Business Day specified in such notice by the Administrative Agent,

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whereupon, subject to the provisions of Section 2.03(c)(iii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Advance to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the applicable L/C Issuer in Dollars.
(iii)      With respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing of Base Rate Advances because the conditions set forth in Section 3.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the applicable L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount (expressed in the amount of the Equivalent in Dollars thereof in the case of any Unreimbursed Amount in Sterling) that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest in accordance with Section 2.08(b) . In such event, each Lender’s payment to the Administrative Agent for the account of the applicable L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03 .
(iv)      Until each Lender funds its Advance or L/C Advance pursuant to this Section 2.03(c) to reimburse the applicable L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Pro Rata Share of such amount shall be solely for the account of such L/C Issuer.
(v)      Each Lender’s obligation to make Advances or L/C Advances to reimburse the applicable L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c) , shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against such L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , however , that each Lender’s obligation to make Advances pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 3.02 (other than delivery by the Borrower of an Advance Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the applicable L/C Issuer for the amount of any payment made by such L/C Issuer under any Letter of Credit, together with interest as provided herein.
(vi)      If any Lender fails to make available to the Administrative Agent for the account of the applicable L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii) , then, without limiting the other provisions of this Agreement, such L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to such L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by such L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees

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customarily charged by such L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Advance included in the relevant Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the applicable L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.
(d)      Repayment of Participations .
(i)      At any time after the applicable L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c) , if the Administrative Agent receives for the account of such L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Pro Rata Share thereof (based on the Equivalent in Dollars for any payment received in Sterling) in Dollars .
(ii)      If any payment received by the Administrative Agent for the account of the applicable L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned by such L/C Issuer (including pursuant to any settlement entered into by such L/C Issuer in its discretion ) , each Lender shall pay to the Administrative Agent for the account of such L/C Issuer its Pro Rata Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e)      Obligations Absolute . The obligation of the Borrower to reimburse the applicable L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
(i)      any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;
(ii)      the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or any other Subsidiary of the Parent may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), such L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
(iii)      any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the

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transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
(iv)      any waiver by such L/C Issuer of any requirement that exists for such L/C Issuer’s protection and not the protection of the Borrower or any waiver by such L/C Issuer which does not in fact materially prejudice the Borrower;
(v)      any honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;
(vi)      any payment made by such L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under, such Letter of Credit if presentation after such date is authorized by the Uniform Commercial Code in effect in the applicable jurisdiction and the ISP;
(vii)      any payment by such L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit, so long as such L/C Issuer reasonably determined that such draft or certificate substantially complied with the terms of such Letter of Credit, or any payment made by such L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under the bankruptcy code of the United States or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally; or
(viii)      any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any other Subsidiary of the Parent.
The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the applicable L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the applicable L/C Issuer and its correspondents unless such notice is given as aforesaid.
(f)      Role of L/C Issuer . Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the applicable L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the


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L/C Issuers, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of any L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided , however , that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuers, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of any L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(e) ; provided , however , that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the applicable L/C Issuer, and such L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by such L/C Issuer’s willful misconduct or gross negligence or such L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuers may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuers shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The L/C Issuers may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.
(g)      Applicability of ISP; Limitation of Liability . Unless otherwise expressly agreed by the applicable L/C Issuer and the Borrower when a Letter of Credit is issued, the rules of the ISP shall apply to each standby Letter of Credit. Notwithstanding the foregoing, none of the L/C Issuers shall be responsible to the Borrower for, and the rights and remedies of any L/C Issuer against the Borrower shall not be impaired by, any action or inaction of any L/C Issuer required under any law or order, that is required to be applied to any Letter of Credit or this Agreement, including the law or any order of a jurisdiction where any L/C Issuer or the beneficiary is located, or the decisions or opinions of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such to apply thereto.
(h)      Letter of Credit Fees . The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Pro Rata Share Percentage, in Dollars, a Letter of Credit fee (the “ Letter of Credit Fee ”) for each Letter of Credit equal to the Applicable Margin for Eurodollar Rate Advances times the Equivalent in Dollars of the daily amount available to be drawn under such Letter of Credit; provided , however , any Letter of Credit Fees otherwise

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payable for the account of a Defaulting Lender with respect to any Letter of Credit as to which such Defaulting Lender has not provided Cash Collateral satisfactory to the applicable L/C Issuer pursuant to this Section 2.03 or Section 2.18 shall be payable, to the maximum extent permitted by applicable Law, to the other Lenders in accordance with the upward adjustments in their respective Pro Rata Share Percentages allocable to such Letter of Credit pursuant to Section 8.16(a)(iv) , with the balance of such fee, if any, payable to such L/C Issuer for its own account. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.05 . Letter of Credit Fees shall be (i) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable Margin for Eurodollar Rate Advances during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Margin for Eurodollar Rate Advances separately for each period during such quarter that such Applicable Margin for Eurodollar Rate Advances was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all Letter of Credit Fees shall accrue at a rate equal to the Applicable Margin for Eurodollar Rate Advances plus 2% per annum.
(i)      Fronting Fee and Documentary and Processing Charges Payable to L/C Issuers . The Borrower shall pay directly to the applicable L/C Issuer for its own account, in Dollars, a fronting fee with respect to each Letter of Credit, at the rate per annum specified in the Fee Letter or as otherwise agreed between the Borrower and the applicable L/C Issuer, computed on the Equivalent in Dollars of the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.05 . In addition, the Borrower shall pay directly to the applicable L/C Issuer for its own account, in Dollars, the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.
(j)      Conflict with Issuer Documents . In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.
(k)      Letters of Credit Issued for Subsidiaries . Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary of the Parent, the Borrower shall be obligated to reimburse the applicable L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries of the Parent inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.

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(l)      Reporting of Letter of Credit Information and Letter of Credit Sublimit . At any time that any Person other than the Person acting as Administrative Agent is an L/C Issuer, then (i) on the last Business Day of each calendar month, (ii) on each date that a Letter of Credit is amended, terminated or otherwise expires, (iii) on each date that an L/C Credit Extension occurs with respect to any Letter of Credit, and (iv) upon the request of the Administrative Agent, each L/C Issuer (or, in the case of parts (ii), (iii) or (iv), the applicable L/C Issuer) shall deliver to the Administrative Agent a report setting forth in form and detail reasonably satisfactory to the Administrative Agent information (including, without limitation, any reimbursement, Cash Collateral, or termination in respect of Letters of Credit issued by such L/C Issuer) with respect to each Letter of Credit issued by such L/C Issuer that is outstanding hereunder. In addition, each L/C Issuer shall provide notice to the Administrative Agent of its Letter of Credit Sublimit, or any change thereto, promptly upon it becoming a L/C Issuer or making any change to its Letter of Credit Sublimit. No failure on the part of any L/C Issuer to provide such information pursuant to this Section 2.03(l) shall limit the obligation of the Borrower or any Lender hereunder with respect to its reimbursement and participation obligations, respectively, pursuant to this Section 2.03 .
Section 2.04      Swing Line Loans .
(a)      The Swing Line . Subject to the terms and conditions set forth herein, the Swing Line Lender agrees, in reliance upon the agreements of the other Lenders set forth in this Section 2.04 , to make Advances (each such Advance, a “ Swing Line Loan ”) to the Borrower from time to time on any Business Day during the period from the Effective Date to the Termination Date in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit; provided, however , that (x) after giving effect to any Swing Line Loan, (i) the Outstanding Amount of all Advances, all L/C Obligations and all Swing Line Loans shall not exceed the Total Commitment, and (ii) the Outstanding Amount of the Advances of any Lender plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations plus such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, (y) the Borrower shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan and (z) the Swing Line Lender will not be required to make any Swing Line Loans if, after giving effect to such Swing Line Loans (i) the sum of the Swing Line Lender’s Pro Rata Share of the Outstanding Amount of Advances (after giving effect to any repayment or prepayment thereof to occur immediately prior to or concurrently with such requested making of Swing Line Loans, including with any portion of the proceeds thereof), plus (ii) the sum of the Swing Line Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus (iii) the outstanding Swing Line Loans of the Swing Line Lender, exceed (iv) the Commitment of the Swing Line Lender. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.04 , prepay under Section 2.11 , and reborrow under this Section 2.04 . Each Swing Line Loan shall be in Dollars. Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Pro Rata Share Percentage times the amount of such Swing Line Loan.
(b)      Borrowing Procedures . Each Swing Line Borrowing shall be made upon the Borrower's irrevocable notice to the Swing Line Lender and the Administrative Agent, which

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may be given by (x) telephone or (y) a Swing Line Loan Notice; provided that any telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a Swing Line Loan Notice. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 3:00 P.M. (New York City time) on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $1,000,000, and (ii) the requested borrowing date, which shall be a Business Day. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 4:00 P.M. (New York City time) on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.04(a) , or (B) that one or more of the applicable conditions specified in Section 3.02 is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 5:00 P.M. (New York City time) on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrower in Same Day Funds.
(c)      Refinancing of Swing Line Loans .
(i)      The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each Lender make a Base Rate Advance in an amount equal to such Lender's Pro Rata Share of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be an Advance Notice for purposes hereof) and in accordance with the requirements of Section 2.02 , without regard to the minimum and multiples specified in Section 2.01 for the principal amount of Base Rate Advances, but subject to the unutilized portion of the Total Commitments and the conditions set forth in Section 3.02 . The Swing Line Lender shall furnish the Borrower with a copy of the applicable Advance Notice promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal to its Pro Rata Share of the amount specified in such Advance Notice available to the Administrative Agent in immediately available funds for the account of the Swing Line Lender at the Administrative Agent’s Office not later than 1:00 P.M. (New York City time) on the day specified in such Advance Notice, whereupon, subject to Section 2.04(c)(ii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Advance to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.
(ii)      If for any reason any Swing Line Loan cannot be refinanced by such an Advance in accordance with Section 2.04(c)(i) , the request for Base Rate Advances submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s payment to the Administrative Agent for

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the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.
(iii)      If any Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i) , the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swing Line Lender in accordance with banking industry rules on interbank compensation. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.
(iv)      Each Lender’s obligation to make Advances or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) in the case of each Lender’s obligation to purchase and fund risk participations only, the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however , that each Lender’s obligation to make Advances (but not to fund risk participations in Swing Line Loans) pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 3.02 . No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein.
(d)      Repayment of Participations .
(i)      At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Pro Rata Share (determined at the time of such purchase and funding) of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s risk participation was funded) in the same funds as those received by the Swing Line Lender.
(ii)      If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Pro Rata Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Lenders under this clause shall survive the payment in full

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of the all amounts owing hereunder and under any Loan Document and the termination of this Agreement.
(e)      Interest for Account of Swing Line Lender . The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans. Until a Lender funds its Base Rate Advance or risk participation pursuant to this Section 2.04 to refinance such Lender’s Pro Rata Share of any Swing Line Loan, interest in respect of such Pro Rata Share shall be solely for the account of the Swing Line Lender, and after such Lender funds its Base Rate Advance or risk participation pursuant to this Section 2.04 to refinance such Lender’s Pro Rata Share of any Swing Line Loan, such interest shall be for the account of such Lender.
(f)      Payments Directly to Swing Line Lender . The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.
Section 2.05      Fees . In addition to certain fees described in subsections (h) and (i) of Section 2.03 :
(a)      Commitment Fee . The Borrower agrees to pay to the Administrative Agent for the account of each Lender in accordance with its Pro Rata Share Percentage, a commitment fee equal to the Applicable Percentage times the actual daily amount by which the Total Commitment exceeds the sum of (i) the Outstanding Amount of Advances and (ii) the Outstanding Amount of L/C Obligations, subject to adjustment as provided in Section 8.16 (the “ Commitment Fee ”). For the avoidance of doubt, the Outstanding Amount of Swing Line Loans shall not be, but the Outstanding Amount of L/C Obligations shall be, counted towards or considered usage of the Total Commitments for purposes of determining the Commitment Fee. The Commitment Fee shall accrue at all times during the period from the Effective Date until the Termination Date, including at any time during which one or more of the conditions in Article III is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December (each, a “ Commitment Fee Payment Date ”), commencing with the Commitment Fee Payment Date first occurring after the Effective Date, and on the Termination Date. The Commitment Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Percentage during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Percentage separately for each period during such quarter that such Applicable Percentage was in effect.
(b)      Agent’s Fees . The Borrower shall pay to the Administrative Agent for its own account such fees as may from time to time be agreed between the Borrower and the Administrative Agent, including without limitation in the Fee Letter.
Section 2.06      Termination or Reduction of the Commitments . The Borrower shall have the right, upon at least three Business Days’ notice to the Administrative Agent, to terminate in whole or permanently reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that each partial reduction of the Total Commitment shall be in the aggregate amount of $25,000,000 or an integral multiple of $1,000,000 in excess thereof.

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Section 2.07      Repayment of Advances .
(a)      The Borrower shall repay to the Administrative Agent for the ratable account of the Lenders on the Termination Date the aggregate principal amount of all Advances then outstanding together with all accrued and unpaid interest, fees and costs associated therewith. Repayments made pursuant to this clause (a) shall be in the same currency in which such outstanding Advances were made.
(b)    The Borrower shall repay each Swing Line Loan together with accrued and unpaid interest thereon on the earlier to occur of (i) the date ten (10) Business Days after such Swing Line Loan is made, and (ii) the Termination Date.
Section 2.08      Interest on Advances .
(a)      Scheduled Interest . The Borrower shall pay interest on the unpaid principal amount of each Advance owing to each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum:
(i)      Base Rate Advances . During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (x) the Base Rate in effect from time to time plus (y) the Applicable Margin for Base Rate Advances in effect from time to time, payable in arrears quarterly on the last Business Day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full.
(ii)      Eurocurrency Rate Advances . During such periods as such Advance is a Eurocurrency Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (x) the Eurocurrency Rate for such Interest Period for such Advance plus (y) the Applicable Margin for Eurocurrency Rate Advances in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurocurrency Rate Advance shall be Converted or paid in full.
(iii)      Swing Line Loans . With respect to each Swing Line Loan, a rate per annum equal at all times to the sum of (x) the Base Rate in effect from time to time plus (y) the Applicable Margin for Base Rate Advances in effect from time to time minus (z) the Commitment Fee in effect from time to time, and payable in arrears on the date of repayment or refinancing, in whole or in part, of such Swing Line Loan.
(b)      Default Interest . Upon the occurrence and during the continuance of an Event of Default under Section 6.01(a) or (e) , the Borrower shall pay interest on (i) the unpaid principal amount of each Advance owing to each Lender, payable in arrears on the dates referred to in clause (a)(i), (a)(ii) or (a)(iii) above, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Advance pursuant to clause (a)(i), (a)(ii) or (a)(iii) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be

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paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Advances pursuant to clause (a)(i) above.
Section 2.09      Interest Rate Determination .
(a)      The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 2.08(a)(i), (ii) or (iii) .
(b)      If, (i) with respect to any Eurocurrency Rate Advance or conversions to or continuations thereof, the Administrative Agent reasonably and in good faith determines that deposits (whether in Dollars or Sterling) are not being offered to banks in the applicable offshore interbank market for such currency for the applicable amount and Interest Period of such Eurocurrency Rate Advance, (ii) adequate and reasonable means do not exist for determining the Eurocurrency Rate (A) for any requested Interest Period with respect to a proposed Eurocurrency Rate Advance (whether denominated in Dollars or Sterling) or (B) in connection with an existing or proposed Base Rate Advance (in each case with respect to clause (i) and (ii) above, “ Impacted Loans ”), or (iii) the Required Lenders notify the Administrative Agent that the Eurocurrency Rate for any Interest Period for any Eurocurrency Rate Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurocurrency Rate Advances for such Interest Period, the Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon (1) the obligation of the Lenders to make or maintain Eurocurrency Rate Advances in the affected currency or currencies shall be suspended (to the extent of the affected Eurocurrency Rate Advances or Interest Periods), and (2) in the event of a determination described in clause (ii)(B) with respect to the Eurocurrency Rate component of the Base Rate, the utilization of the Eurocurrency Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurocurrency Rate Advances in the affected currency or currencies (to the extent of the affected Eurocurrency Rate Advances or Interest Periods) or, failing that, will be deemed (x) to have converted such request for a Borrowing of Eurocurrency Rate Advances into a request for a Borrowing of Base Rate Advances in the amount specified therein (or in the Equivalent amount in Dollars if such request was for a Borrowing of Eurocurrency Rate Advances in Sterling) and (y) to have withdrawn any such request for a conversion to, or continuation of, a Eurocurrency Rate Advance, in which case each Eurocurrency Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance in Dollars, and each Base Rate Advance shall continue as a Base Rate Advance.
(c)      Notwithstanding the foregoing, if the Administrative Agent or the Required Lenders have made any determination described in clause (b) above, the Administrative Agent may, with the consent of the Borrower and the Required Lenders, establish an alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (i) the Administrative Agent revokes the notice delivered with respect to the Impacted Loans under clause (b) of this section, (ii) the Administrative Agent or the Required Lenders notify the Administrative Agent and the Borrower that such alternative interest rate does not adequately and fairly reflect the cost to such Lenders of funding the

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Impacted Loans, or (iii) any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its Applicable Lending Office to make, maintain or fund Advances whose interest is determined by reference to such alternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing and provides the Administrative Agent and the Borrower written notice thereof.
(d)      If the Borrower shall fail to select the duration of any Interest Period for any Eurocurrency Rate Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01 , the Administrative Agent will forthwith so notify the Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period for such Eurocurrency Rate Advance, Convert into Base Rate Advances.
(e)      Upon the occurrence and during the continuance of any Event of Default, (i) each Eurocurrency Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurocurrency Rate Advances shall be suspended.
Section 2.10      Optional Conversion of Advances . The Borrower may on any Business Day, upon notice given to the Administrative Agent, which may be given by (a) telephone or (b) an Advance Notice; provided that any telephonic notice must be confirmed promptly by delivery to the Administrative Agent of an Advance Notice. Each such Advance Notice must be received by the Administrative Agent not later than 11:00 A.M. (New York City time) on the third Business Day, with respect to Advances in Dollars, or the fifth Business Day, with respect to Advances in Sterling, prior to the date of the proposed Conversion and subject to the provisions of Sections 2.09 and 2.13 , Convert all Advances of one Type comprising the same Borrowing into Advances of the other Type; provided , however , that any Conversion of Eurocurrency Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurocurrency Rate Advances, any Conversion of Base Rate Advances into Eurocurrency Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Advances shall result in more separate Eurocurrency Rate Borrowings than permitted under Section 2.02(b) .
Section 2.11      Prepayments of Advances .
(a)      Optional Prepayments . The Borrower may, upon notice to the Administrative Agent, which must be in a form reasonably acceptable to the Administrative Agent, stating the proposed date and aggregate principal amount of the prepayment, given not later than 11:00 A.M. (New York City time) on the third Business Day, with respect to Advances in Dollars, or the fifth Business Day, with respect to Advances in Sterling, prior to the date of such proposed prepayment, in the case of Eurocurrency Rate Advances, and not later than 12:00 P.M. (New York City time) on the day of such proposed prepayment, in the case of Base Rate Advances, and if such notice is given the Borrower shall, prepay the Outstanding Amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid, with such prepayment to be made in the currency in which such Advances were made; provided, however , that (x) except in

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the case of prepayments of Swing Line Loans, as described in clause (z) below, each partial prepayment shall be in an aggregate principal amount of $5,000,000 or the Equivalent thereof in Sterling or an integral multiple of $1,000,000 or the Equivalent thereof in Sterling in excess thereof, (y) in the event of any such prepayment of a Eurocurrency Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(c) and (z) in the case of a Swing Line Loan, the Borrower may prepay the Outstanding Amount of such Swing Line Loan, together with accrued interest to the date of such prepayment on the principal amount prepaid, at any time in minimum increments of $100,000.
(b)      Mandatory Prepayments .
(i)      If at any time the sum of (A) the aggregate principal amount of all Advances denominated in Dollars then outstanding plus (B) the Equivalent in Dollars of the aggregate principal amount of all Advances denominated in Sterling then outstanding plus (C) the aggregate amount of all L/C Obligations denominated in Dollars then outstanding plus (D) the Equivalent in Dollars of the aggregate amount of all L/C Obligations denominated in Sterling outstanding exceeds the Total Commitment on such date, the Borrower shall, within two Business Days after receipt of such notice given pursuant to (ii) below, prepay the outstanding principal amount of any Advances and/or Cash Collateralize 100% of the L/C Obligations pursuant to this Section 2.11(b) in an aggregate amount sufficient to reduce such sum to an amount not to exceed the Total Commitment on such date.
(ii)      Each prepayment made pursuant to this Section 2.11(b) (A) shall be made together with any interest accrued to the date of such prepayment on the principal amounts prepaid and, in the case of any prepayment of a Eurocurrency Rate Advance on a date other than the last day of an Interest Period or at its maturity, any additional amounts which the Borrower shall be obligated to reimburse to the Lenders in respect thereof pursuant to Section 8.04(c) , and (B) shall be made in the currency in which the Advances subject to such prepayment were made. The Administrative Agent shall give prompt notice of any prepayment required under this Section 2.11(b) to the Borrower and the Lenders.
(c)      Hedge Agreements . All Hedge Agreements, if any, between the Borrower and any Lender or its affiliates are independent agreements governed by the written provisions of such Hedge Agreements, which will remain in full force and effect, unaffected by any repayment, prepayment, acceleration, reduction, increase or change in terms of this Agreement or the Notes, except as otherwise expressly provided in said written swap agreements, and any payoff statements from the Administrative Agent relating to this Agreement shall not apply to said Hedge Agreements, except as otherwise expressly provided in such payoff statement.
(d)      Prepayments of Swing Line Loans . If at any time (i) the sum of the Swing Line Lender’s Pro Rata Share of the Outstanding Amount of Advances, plus (ii) the sum of the Swing Line Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus (iii) the outstanding Swing Line Loans of the Swing Line Lender, exceed (iv) the Commitment of the Swing Line Lender, the Borrower shall, upon a request from the Swing Line Lender specifying


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the amount of such excess, promptly repay the outstanding Swing Line Loans to the extent necessary to eliminate such excess.
Subject to Section 8.16 , each prepayment pursuant to this Section 2.11 (other than prepayments of Swing Line Loans) shall be applied to the Advances of the Lenders in accordance with their respective Pro Rata Share Percentages.
Section 2.12      Increased Costs .
(a)      If, due to any Change in Law, there shall be any increase in the cost to any Lender of agreeing to make or making, funding, converting to, continuing or maintaining Eurocurrency Rate Advances or to any Lender or the applicable L/C Issuer of participating in, issuing or maintaining any Letters of Credit (excluding for purposes of this Section 2.12 any such increased costs resulting from (i) Indemnifiable Taxes or Other Taxes (as to which Section 2.15 shall govern) and (ii) changes in taxes measured by or imposed upon the net income or gross income or franchise taxes, or taxes measured by or imposed upon capital or net worth, or branch taxes, of such Lender, its Applicable Lending Office or such L/C Issuer), then the Borrower shall from time to time, within ten days of demand by such Lender or such L/C Issuer (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender or such L/C Issuer additional amounts sufficient to compensate such Lender or such L/C Issuer for such increased cost; provided that, before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office and such L/C Issuer agrees to use reasonable efforts to assign its rights and obligations hereunder to another of its offices, branches or affiliates if the making of such a designation or assignment would avoid the need for, or reduce the amount of, such additional cost and would not, in the reasonable judgment of such Lender or such L/C Issuer, be otherwise disadvantageous to such Lender or such L/C Issuer.
(b)      If any Lender or any L/C Issuer reasonably determines that any Change in Law affects or would affect the amount of capital or liquidity required or expected to be maintained by such Lender or such L/C Issuer or any corporation controlling such Lender or such L/C Issuer and that the amount of such capital is increased by or based upon the existence of such Lender’s commitment to lend hereunder, such L/C Issuer's commitment to issue Letters of Credit hereunder, and other commitments of similar types, and such Lender or such L/C Issuer reasonably determines that the rate of return on its or such controlling corporation’s capital as a consequence is reduced to a level below that which such Lender, such L/C Issuer or such controlling corporation would have achieved but for the occurrence of such conditions (taking into consideration such Lender’s or L/C Issuer’s policies and the policies of such Lender’s or L/C Issuer’s controlling company with respect to capital adequacy), then, within ten days of demand by such Lender or such L/C Issuer (with a copy of such demand to the Administrative Agent), the Borrower shall pay to the Administrative Agent for the account of such Lender or such L/C Issuer, from time to time as specified by such Lender or such L/C Issuer, additional amounts sufficient to compensate such Lender, such L/C Issuer or such corporation in the light of such circumstances, to the extent that such Lender or such L/C Issuer reasonably determines such increase in capital to be allocable to the existence of such Lender’s or such L/C Issuer’s commitment to lend hereunder; provided that the Borrower shall not be required to compensate a Lender or an L/C Issuer pursuant to the foregoing provisions of this Section for any increased

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costs incurred or reductions suffered more than nine months prior to the date that such Lender or such L/C Issuer, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
(c)      If a Lender changes its Applicable Lending Office or an L/C Issuer assigns its rights and obligations hereunder to another of its offices, branches or affiliates (other than pursuant to this Section 2.12 or Section 2.13 or 2.15(g) ) and the effect of such change, as of the date of such change, would be to cause the Borrower to become obligated to pay any additional amounts under this Section 2.12 , the Borrower shall not be obligated to pay such additional amount.
(d)      A certificate of a Lender or an L/C Issuer setting forth the amount of any claim made under this Section 2.12 and identifying with reasonable specificity the basis for calculating such amount, shall be delivered to the Borrower and the Administrative Agent and shall be conclusive absent manifest error.
Section 2.13      Illegality; Circumstances Affecting Availability . Notwithstanding any other provision of this Agreement, if any Lender shall notify the Administrative Agent (who will promptly notify the Borrower and the other Lenders) that the introduction of or any change in or in the interpretation of any law or regulation after the date hereof makes it unlawful, or any central bank or other Governmental Authority asserts that it is unlawful, for any Lender or its Eurocurrency Lending Office to perform its obligations hereunder to make Advances for which interest is determined by reference to the Eurocurrency Rate or to fund or maintain such Advances hereunder, or if the Administrative Agent determines that by reason of circumstances affecting foreign exchange and interbank markets generally, the Eurocurrency Rate cannot be determined, then (A) each Eurocurrency Rate Advance will automatically, upon such notice, Convert into a Base Rate Advance (the interest rate on which Base Rate Advances shall, if necessary to avoid any illegality, be determined by the Administrative Agent without reference to the Eurocurrency Rate component of the Base Rate), and (B) the obligation of the Lenders to make Eurocurrency Rate Advances, Convert Base Rate Advances into Eurocurrency Rate Advances or, if necessary to avoid any illegality, to make Base Rate Advances the interest rate on which is determined by reference to the Eurocurrency Rate component of the Base Rate shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension or inability to determine the Eurocurrency Rate no longer exist or that such Lender has entered into one or more Assignment and Assumptions pursuant to Section 8.06 assigning its Commitment to one or more Eligible Assignees; provided that, before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such a designation would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.


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Section 2.14      Payments Generally and Computations .
(a)      General . All payments hereunder and under the Notes to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. The Borrower shall make each payment hereunder and under the Notes not later than 11:00 A.M. (New York City time) on the day when due in Dollars, in the case of Advances denominated in Dollars, or in Sterling, in the case of Advances denominated in Sterling, to the Administrative Agent at the Administrative Agent’s Office in Same Day Funds. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or the Commitment Fee ratably (other than amounts payable pursuant to Section 2.12 , 2.15 or 8.04(c) ) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.06(c) , from and after the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.
(b)      All computations of interest based on the Base Rate (including in each case where the Base Rate is determined by reference to the Eurocurrency Rate) or the Federal Funds Rate and all computations of interest in respect of Advances denominated in Sterling shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurocurrency Rate (other than (i) any case where the Base Rate is determined by reference to the Eurocurrency Rate, and (ii) in respect of interest on Advances in Sterling) and of the Commitment Fee, shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or Commitment Fee is payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.
(c)      Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or the Commitment Fee, as the case may be; provided , however , that, if such extension would cause payment of interest on or principal of Eurocurrency Rate Advances to be made in the next following calendar month, or cause any payment of interest on or principal of Advances to be made after the Maturity Date, such payment shall be made on the next preceding Business Day.
(d)      Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders or any L/C Issuer hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each

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Lender or the applicable L/C Issuer, as the case may be, on such due date an amount equal to the amount then due such Lender or such L/C Issuer. If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender or the applicable L/C Issuer, as the case may be, shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender or such L/C Issuer together with interest thereon, for each day from the date such amount is distributed to such Lender or such L/C Issuer until the date such Lender or such L/C Issuer repays such amount to the Administrative Agent, at the Overnight Rate.
Section 2.15      Taxes .
(a)      Except as otherwise required by law, any and all payments by the Borrower hereunder, under the Notes or under any other Loan Document issued hereunder shall be made, in accordance with Section 2.14 , free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings imposed or asserted by any taxation authority and all liabilities with respect thereto (all such taxes, levies, imposts, deductions, charges, withholdings, and liabilities in respect of payments hereunder, under the Notes or under any other Loan Document, along with any penalties, additions to tax, interest and reasonable expenses arising therefrom or with respect thereto (whether or not correctly or legally imposed or asserted by the relevant taxing authority), collectively being hereafter referred to as “ Taxes ”), excluding , in the case of payments made to any Lender, any L/C Issuer or the Administrative Agent (A) Taxes imposed on or measured by its net income (however denominated), and franchise Taxes, branch Taxes, Taxes on doing business and Taxes measured by or imposed upon its capital or net worth, in each case imposed as a result of such Lender (and or such Lender’s Applicable Lending Office), such L/C Issuer or the Administrative Agent being organized under the laws of, or being a legal resident of, or having a fixed place of business or a permanent establishment or doing business in, or as a result of any present or former connection between such Lender, such L/C Issuer or the Administrative Agent with the jurisdiction imposing such Tax (other than any such connection arising solely from such Lender (and or such Lender’s Applicable Lending Office), such L/C Issuer or the Administrative Agent having executed, delivered or performed its obligations, or having received a payment, or having enforced its rights and remedies, under this Agreement or any of the other Loan Documents), (B) United States branch profits tax or any similar tax imposed by any jurisdiction in which the Borrower is located, (C) in the case of a Lender (including such a Lender when acting in the capacity of L/C Issuer) organized under the laws of a jurisdiction outside the United States, any United States withholding tax that is required to be imposed on amounts payable to such Lender (including such a Lender when acting in the capacity of L/C Issuer) pursuant to applicable laws in force at the time such Lender becomes a party hereto (or designates a new Applicable Lending Office), (D) as provided in Section 2.15(g) , (E) any tax imposed by FATCA (or similar reporting and withholding regime imposed by the United Kingdom), (F) United Kingdom withholding Taxes except to the extent no United Kingdom withholding Taxes would have been imposed but for a change, after the date such Lender or the Administrative Agent (as the case may be) becomes a party hereto, in United Kingdom tax law or officially published HM Revenue & Customs practice or an amendment or revocation, after the date such Lender or the Administrative Agent (as the case may be) becomes a party hereto, of an applicable United Kingdom income tax treaty, and (G) United Kingdom Taxes imposed as a result of the failure of HM Revenue & Customs to approve, on or before a payment of interest to a Lender hereunder, a

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claim by such Lender for exemption from such United Kingdom Taxes, where such failure is due to such Lender’s failure to submit a validly completed and executed Treaty Form within a reasonable time after such Lender would have been allowed to submit such Treaty Form, it being understood that after any such approval by HM Revenue & Customs of such Lender’s claim for exemption, such United Kingdom Taxes with respect to such Lender shall (for so long as such Lender remains eligible for the purpose of the relevant double tax treaty or would have remained eligible but for an amendment or revocation of the relevant treaty) not be excluded by this clause (G) from the application of this Section 2.15(a) (any non-excluded Taxes hereinafter referred to as “ Indemnifiable Taxes ”). If the Borrower shall be required by law to deduct any Indemnifiable Taxes from or in respect of any sum payable hereunder, under any Note issued hereunder or under any other Loan Document to any Lender, any L/C Issuer or the Administrative Agent or, if the Administrative Agent shall be required by law to deduct any Indemnifiable Taxes from or in respect of any sum paid or payable hereunder, under any Note or under any other Loan Document to any Lender or any L/C Issuer, (i) the sum payable shall be increased as may be necessary so that after making all required deductions for Indemnifiable Taxes (including deductions for Indemnifiable Taxes, whether by the Borrower or the Administrative Agent, applicable to additional sums payable under this Section 2.15 ) such Lender, such L/C Issuer or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower (or, as the case may be and as required by applicable law, the Administrative Agent) shall make such deductions and (iii) the Borrower (or, as the case may be and as required by applicable law, the Administrative Agent) shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.
(b)      In addition, the Borrower shall timely pay in accordance with applicable laws any present or future stamp or documentary taxes or any other excise (other than income) or property taxes, charges or similar levies that arise from any payment made hereunder, under the Notes or under any other Loan Document or from the execution, delivery or registration of, or performing under this Agreement, the Notes, any other Loan Document or any document to be furnished under or in connection with any thereof or any modification or amendment in respect of this Agreement, the Notes or any other Loan Document (hereinafter referred to as “ Other Taxes ”); provided that for the avoidance of doubt, the Taxes imposed by FATCA shall not be treated as Other Taxes.
(c)      The Borrower shall indemnify each Lender, each L/C Issuer and the Administrative Agent for the full amount of Indemnifiable Taxes or Other Taxes imposed on or paid by such Lender, such L/C Issuer or the Administrative Agent (as the case may be) and any liability (including penalties, interest and reasonable expenses) (including Indemnifiable Taxes imposed or asserted on or attributable to amounts payable under this Section 2.15 ) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender, such L/C Issuer or the Administrative Agent (as the case may be) makes written demand therefor, whether or not such Indemnifiable Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.
(d)      Within 30 days after the date of any payment of Indemnifiable Taxes under Section 2.15(a) by the Borrower, the Borrower shall furnish to the Administrative Agent, at its address referred to in Section 8.02 , the original or a certified copy of a receipt evidencing such

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payment to the extent such receipt is received by the Borrower, or other written proof of payment reasonably satisfactory to the Administrative Agent showing payment thereof. In the case of any payment hereunder or under the Notes issued hereunder by or on behalf of the Borrower organized under the laws of the United Kingdom through an account or branch outside the United Kingdom or by or on behalf of the Borrower by a payor that is not a United Kingdom person, if the Borrower determines that no Indemnifiable Taxes are payable in respect thereof, the Borrower shall furnish, or shall cause such payor to furnish, to the Administrative Agent, at such address, an opinion of counsel acceptable to the Administrative Agent stating that such payment is exempt from Indemnifiable Taxes.
(e)      Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender and on the date of the Assignment and Assumption pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter as requested in writing by the Borrower shall provide each of the Administrative Agent and the Borrower with (i) two original Internal Revenue Service Form W-8BEN, or W-8BEN-E, as applicable, W-8ECI, or W-8IMY as appropriate, or any successor or other form prescribed by the Internal Revenue Service or reasonably requested by the Borrower or the Administrative Agent, certifying that such Lender is exempt from United States withholding tax and (ii) to the extent that any such form or other certification becomes obsolete with respect to any Lender, such Lender shall, upon the written request of the Borrower to such Lender and the Administrative Agent, promptly provide either an updated or successor form or certification to the Borrower and the Administrative Agent unless, in each case, any change in treaty, law or regulation has occurred after the date such Lender becomes a party hereunder which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender so advises the Borrower and the Administrative Agent. Each Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code shall deliver to the Borrower and the Administrative Agent executed originals of Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable laws or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent, as the case may be, to determine whether or not such Lender is subject to backup withholding or information reporting requirements. If a payment made to a Lender under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. For the avoidance of doubt, for purposes of determining withholding Taxes imposed under FATCA, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) this Agreement as not qualifying as a “grandfathered obligation” within the meaning of

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Treasury Regulation Section 1.1471-2(b)(2)(i). Solely for purposes of this clause (e), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(f)      Each Lender shall cooperate with the Borrower in promptly completing any procedural formalities necessary for the Borrower to obtain authorization to make any payment hereunder, under the Notes or under any other Loan Document, without deduction or withholding for or on account of the United Kingdom Tax, including (if applicable): (i)(A) as soon as reasonably practicable following the date it becomes a party hereto, submitting to its Relevant Taxing Authority a validly completed Treaty Form (or successor Treaty Form thereto) claiming exemption from United Kingdom withholding Tax on interest, or (B) on or before the date it becomes a party hereto, furnishing to the Borrower, with a copy to the Administrative Agent, a certificate substantially in the form of Exhibit I (a “ U.K. Tax Compliance Certificate ”) certifying that such Lender (1) is a “bank” within the meaning of Section 879 of the Income Tax Act 2007 of the United Kingdom and (2) is within the charge to corporation tax in the United Kingdom with respect to payment hereunder; and (ii) agreeing, upon reasonable request by the Borrower, to provide to the Borrower and the Administrative Agent, to the extent it is legally entitled to do so, such other forms or information as may be required by law in order to establish the legal entitlement of such Lender to an exemption from United Kingdom withholding Tax with respect to payments under this Agreement and the Notes issued hereunder, unless, in each case, any change in treaty, law or regulation has occurred after the date such Lender becomes a party hereunder which renders any such forms or information inapplicable or which would prevent such Lender from duly completing and delivering any such form or providing such information with respect to it and such Lender so advises the Borrower and the Administrative Agent.
(g)      For any period with respect to which a Lender has failed to provide the Borrower with the appropriate form described in Section 2.15(e) ( other than if the Borrower has failed to timely request with reasonable notice any appropriate renewal, successor or other form or if any such form otherwise is not required under subsection (e) or (f)) or for which any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.06(d)(iii) relating to the maintenance of a Participant Register are required to be paid, such Lender shall not be entitled to indemnification under Section 2.15(a) or (c) with respect to Indemnifiable Taxes imposed by the United Kingdom or the United States by reason of such failure; provided , however , that should a Lender become subject to Indemnifiable Taxes or United Kingdom or United States withholding Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Indemnifiable Taxes or United Kingdom or United States withholding Taxes.
(h)      If a condition or an event occurs which would, or would upon the passage of time or giving notice, result in the payment of any additional amounts pursuant to this Section 2.15 , each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office and each L/C Issuer agrees to use its reasonable efforts to assign its rights and obligations hereunder to another of its offices, branches or affiliates if the making of such a change or assignment would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender or such L/C Issuer, be otherwise disadvantageous to such Lender or such L/C Issuer.

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(i)      If the Administrative Agent, any L/C Issuer or any Lender, in its sole opinion exercised in good faith, determines that it has finally and irrevocably received or been granted a refund in respect of any Indemnifiable Taxes or Other Taxes as to which indemnification has been paid by the Borrower pursuant to Section 2.15(a) or (c) , it shall promptly remit such refund to the Borrower, net of all out-of-pocket expenses of the Administrative Agent, such L/C Issuer or such Lender; provided , however , that the Borrower upon the request of the Administrative Agent, such L/C Issuer or such Lender, agrees promptly to return such refund to such party in the event such party is required to repay such refund to the relevant taxing authority. The Administrative Agent, such L/C Issuer or such Lender shall provide the Borrower with a copy of any notice or assessment from the relevant taxing authority (deleting any confidential information contained therein) requiring the repayment of such refund. Nothing contained herein shall impose an obligation on the Administrative Agent, any L/C Issuer or any Lender to apply for any refund or to disclose to any party any information regarding their proprietary information regarding tax affairs and computations. If the Borrower determines in good faith that a reasonable basis exists for contesting any Taxes for which indemnification has been demanded hereunder, the relevant Lender, the relevant L/C Issuer or the Administrative Agent, as applicable, to the extent permitted by law, rule or regulation, shall reasonably cooperate with the Borrower in challenging such Taxes at the Borrower’s expense if so requested by the Borrower in writing. If any Indemnifiable Taxes or Other Taxes are imposed that result in an indemnification or payment obligation on the Borrower, the Borrower shall be entitled to challenge or dispute the imposition of such Indemnifiable Taxes or Other Taxes with the applicable taxing authority in an appropriate proceeding diligently conducted, and the Borrower shall be permitted to control such proceeding, including as to settlement.
(j)      If a Lender changes its Applicable Lending Office or an L/C Issuer assigns its rights and obligations hereunder to another of its offices, branches or affiliates (other than pursuant to subsection (g) above or Section 2.12 or 2.13 ) and the effect of such change, as of the date of such change, would be to cause the Borrower to become obligated to pay any additional amounts under this Section 2.15 , the Borrower shall not be obligated to pay such additional amount.
(k)      A certificate of a Lender or an L/C Issuer setting forth such amount or amounts as shall be necessary to compensate such Lender or such L/C Issuer specified in Section 2.15(a) , (b) , or (c) above, as the case may be, and identifying with reasonable specificity the basis for calculation of such amount or amounts, shall be delivered to the Borrower and the Administrative Agent and shall be conclusive absent manifest error.
(l)      The obligations of a Lender and an L/C Issuer under this Section 2.15 shall survive the termination of this Agreement and the payment of the Advances and all other Obligations hereunder.
(m)      Where the Borrower or Guarantor is required under any provision of this Agreement, the Notes or any other Loan Document issued hereunder to reimburse or indemnify the Administrative Agent, any L/C Issuer and/or any Lender for any cost or expense, then, notwithstanding any provision to the contrary, the amount payable shall not include any amount or amounts in respect of VAT to the extent that the recipient reasonably determines that it or any


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of its Affiliates is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
Section 2.16      Sharing of Payments, Etc . If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances owing to it (other than pursuant to Section 2.12 , 2.15 or 8.04(c) ), or the participations in L/C Obligations or in Swing Line Loans held by it, in excess of its ratable share of payments on account of the Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Advances (and subparticipations in L/C Obligations and Swing Line Loans) owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided , however , that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.16 may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. Notwithstanding the foregoing, the provisions of this Section shall not be construed to apply to (x) any payment that is in excess of such Lender’s ratable share made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including those provisions providing for the application of funds when a Defaulting Lender exists) or (y) the application of Cash Collateral or other credit support (and proceeds thereof) in respect of obligations relating to Letters of Credit (including related Lender participation obligations) provided for in Section 2.18 .
Section 2.17      Use of Proceeds . The proceeds of the Advances shall be available (and the Borrower agrees that it shall use such proceeds) solely for working capital, capital expenditures, general corporate purposes and all other lawful purposes.
Section 2.18      Cash Collateral and Other Credit Support .
(a)      Certain Credit Support Events .
(i)      Upon the request of the Administrative Agent or any L/C Issuer (A) if such L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, (B) if, as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, or (C) if the Outstanding Amount of all L/C Obligations exceeds the Letter of Credit Sublimit, the Borrower shall, in the case of clause (A) and (B) above, promptly Cash Collateralize 100% of the then Outstanding Amount of all L/C Obligations, and in the case of clause (C) above, promptly Cash Collateralize 100% of such excess.


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(ii)      At any time (A) a Defaulting Lender exists, (B)(1) the Borrower requests a Letter of Credit or (2) a Letter of Credit is outstanding, and (C) the Pro Rata Share Percentages of each non-Defaulting Lender cannot fully be adjusted as set forth in Section 8.16(a)(iv) , then the Administrative Agent and the applicable L/C Issuer, may, in their sole discretion, require that the Borrower enter into arrangements satisfactory to the Administrative Agent and such L/C Issuer for the delivery of Cash Collateral to the Administrative Agent in an amount sufficient to cover all of such L/C Issuer’s Fronting Exposure (after giving effect to Section 8.16(a)(iv) and any Cash Collateral provided by the Defaulting Lender). With respect to the circumstances described in clause (B)(1) above, such arrangements shall be a condition to the issuance of such Letter of Credit. With respect to the circumstances described in clause (B)(2) above, such arrangements shall be made no later than five (5) Business Days after written notice to the Borrower from the Administrative Agent or the applicable L/C Issuer that the circumstances in clause (A) and (C) above exist, unless the Borrower (x) has replaced such Defaulting Lender prior to such time in accordance with the terms of this Agreement or (y) caused such Letter of Credit to be terminated or replaced.
(b)      Grant of Security Interest . All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. The Borrower, and to the extent provided by any Defaulting Lender, such Lender, agree that to the extent any Cash Collateral is provided to the Administrative Agent under any of this Section 2.18 or Sections 2.03 , 2.11 , 6.02 or 8.16 , the Borrower or such Lender, as applicable, will at such time grant to (and subject to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuers and the Lenders, a first priority security interest in all such Cash Collateral (including all deposit accounts and all balances therein, all other property so provided as collateral pursuant hereto, and all proceeds of the foregoing) pursuant to a security agreement and a Cash Collateral account control agreement, in each case, to be mutually agreed and entered into between the Borrower, or the Defaulting Lender, as the case may be, and the Administrative Agent, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.18(c) . If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable L/C Issuer’s Fronting Exposure and other obligations secured thereby, the Borrower or the relevant Defaulting Lender will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.
(c)      Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.18 or Sections 2.03 , 2.11 , 6.02 or 8.16 in respect of Letters of Credit shall be held and applied to the satisfaction of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.
(d)      Release . Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination

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of the applicable L/C Issuer’s Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 8.06(b)(vi) )) or (ii) the Administrative Agent’s good faith determination that there exists excess Cash Collateral; provided, however , (x) that Cash Collateral furnished by or on behalf of a Loan Party shall not be released during the continuance of a Default or Event of Default (and following application as provided in this Section 2.18 may be otherwise applied in accordance with Section 6.02 ), and (y) the Person providing Cash Collateral and the applicable L/C Issuer may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.
(e)      Claims against Defaulting Lenders . No action taken, permitted to be taken or omitted to be taken by the Borrower, the Administrative Agent, any L/C Issuer or any Lender under this Section 2.18 or any of the other terms or provisions of this Agreement shall constitute or be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, any L/C Issuer or any other Lender may have against a Defaulting Lender for its failure to comply with any of the terms or provisions of this Agreement.
Section 2.19      Increase in Commitments .
(a)      Request for Increase . Provided there exists no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Borrower may from time to time request an increase in the Total Commitments to a maximum amount (after giving effect to all such requests) not to exceed $2,000,000,000; provided that any such request for an increase shall be in a minimum amount of $10,000,000. The Borrower may offer such increase to the Lenders and, at their option, to other financial institutions which qualify as Eligible Assignees identified by the Borrower and approved by the Administrative Agent, the Swing Line Lender and the L/C Issuers (which approvals shall not be unreasonably withheld, conditioned or delayed). At the time of sending such notice, the Borrower (in consultation with the Administrative Agent) shall specify the time period within which each Lender and, as applicable, each Eligible Assignee, is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders and to such Eligible Assignees).
(b)      Elections to Increase . Each Lender and, as applicable, each Eligible Assignee, shall notify the Administrative Agent within such time period whether or not it agrees to participate in such increase and, if so, by the amount thereof. Any Lender or Eligible Assignee not responding within such time period shall be deemed to have declined to participate in such requested increase.
(c)      Notification by Administrative Agent . The Administrative Agent shall notify the Borrower, each Lender and, as applicable, each Eligible Assignee of the Lenders’ and such Eligible Assignees’ responses to each request made hereunder. Each Eligible Assignee invited to participate in such requested increase, and which agrees to do so, shall become a Lender under this Agreement pursuant to a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent and its counsel.



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(d)      Effective Date and Allocations . If the Total Commitments are increased in accordance with this Section, the Administrative Agent and the Borrower shall determine the effective date (the “ Increase Effective Date ”) and the final allocation of such increase. The Administrative Agent shall promptly notify the Borrower and the Lenders (including any Eligible Assignee that becomes a Lender pursuant to this Section 2.19 ) of the final allocation of such increase and the Increase Effective Date. Simultaneously with the Increase Effective Date, (i) the Commitments of each of the Lenders and the outstanding amount of all Advances shall be reallocated to take into account such increase and the final allocation thereof, and the requisite assignments shall be deemed to be made among the Lenders (including any Eligible Assignee that becomes a Lender pursuant to this Section 2.19 ), with the same force and effect as if such assignments were evidenced by the applicable Assignments and Assumptions but without the payment of any related assignment fee, and no other documents or instruments shall be, or shall be required to be, executed in connection with such assignments (all of which such requirements are hereby waived), and (ii) each assignee Lender shall make full cash settlement with each corresponding assignor Lender, either directly or through the Administrative Agent, as the Administrative Agent may direct or approve, with respect to all such assignments and reallocations.
(e)      Conditions to Effectiveness of Increase . As a condition precedent to such increase, the Borrower shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Increase Effective Date (in sufficient copies for each Lender (including any Eligible Assignee that becomes a Lender pursuant to this Section 2.19 ) ) signed by an authorized signatory of such Loan Party (x) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (y) in the case of the Borrower, certifying that, immediately before and after giving effect to such increase, (A) the representations and warranties contained in Article IV and the other Loan Documents are true and correct in all material respects on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date, and except that for purposes of this Section 2.19 , the representations and warranties contained in Section 4.01(f) shall be deemed to refer to the most recent statements furnished pursuant to Section 5.01(h) , and (B) no Default exists or will result from the increase in the Total Commitment.
(f)      Conflicting Provisions . This Section shall supersede any provisions in Section 2.16 or 8.01 to the contrary.
ARTICLE III     

CONDITIONS TO EFFECTIVENESS AND LENDING
Section 3.01      Conditions Precedent to Effectiveness . This Agreement shall become effective on the date (the “ Effective Date ”) that the following conditions precedent have been satisfied:
(a)      The Borrower shall have paid all fees and expenses of the Administrative Agent, the L/C Issuers and the Lenders payable hereunder and accrued as of the Effective Date (including the accrued fees and expenses of counsel to the Administrative Agent to the extent

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invoiced at least two Business Days prior to the Effective Date, plus such additional amounts of such fees and expenses as shall constitute a reasonable estimate of such fees and expenses incurred or to be incurred through the closing proceedings ( provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent)).
(b)      On the Effective Date, the following statements shall be true and the Administrative Agent shall have received for the account of each Lender a certificate signed by a duly authorized Director of the Borrower, dated the Effective Date, stating that:
(i)      The representations and warranties contained in Section 4.01 are correct in all material respects on and as of the Effective Date; and
(ii)      No event has occurred and is continuing that constitutes a Default.
(c)      The Administrative Agent shall have received on or before the Effective Date the following, each dated such day, in form and substance satisfactory to the Administrative Agent and (except for the Notes) in sufficient copies for each Lender:
(i)      Executed counterparts of this Agreement from all parties hereto.
(ii)      If requested by a Lender, a Note payable to the order of such Lender, in a principal amount equal to each such Lender’s Commitment.
(iii)      Certified copies of the resolutions of the Board of Directors (or committee thereof) of the Borrower and the Guarantor approving this Agreement, the Notes and the Guaranty to which it is or is to be a party, and of all documents evidencing other necessary corporate action and governmental and other third party approvals and consents, if any, with respect to this Agreement, the Notes and each Guaranty.
(iv)      A certificate of the Director, Secretary or an Assistant Secretary of each Loan Party certifying the names and true signatures of the officers of such Loan Party authorized to sign the Loan Documents to which it is a party and the other documents to be delivered hereunder.
(v)      The Parent Guaranty duly executed by the Parent.
(vi)      An opinion of Alston & Bird LLP, counsel for the Loan Parties, in substantially the form of Exhibit E attached hereto.
(vii)      An opinion of Linklaters LLP, English counsel for the Borrower, in substantially the form of Exhibit F attached hereto and to such other matters as any Lender through the Administrative Agent may reasonably request.
(viii)      An opinion of Appleby (Bermuda) Limited, Bermuda counsel for the Parent, in substantially the form of Exhibit G attached hereto and to such other matters as any Lender through the Administrative Agent may reasonably request.


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(ix)      An acceptance of the appointment of the Process Agent (as such term is defined in Section 8.12 ) for each of the Parent and the Borrower.
(x)      A certificate signed by the chief financial officer of the Parent certifying the current Debt Ratings.
(d)      The Administrative Agent shall have received the Consolidated financial statements of the Parent and its Subsidiaries for the fiscal year ended December 31, 2016 and the fiscal quarter ended March 31, 2017, in form and substance reasonably satisfactory to the Administrative Agent.
Section 3.02      Conditions Precedent to Each Borrowing and Each L/C Credit Extension . The obligation of each Lender to make an Advance on the occasion of each Borrowing and the obligation of each L/C Issuer to make an L/C Credit Extension shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Borrowing or date of such L/C Credit Extension the following statements shall be true (and each of the giving of the applicable Advance Notice or Letter of Credit Application and the acceptance by the Borrower of the proceeds of such Borrowing or the issuance of such Letter of Credit, as applicable, shall constitute a representation and warranty by the Borrower that on the date of such Borrowing or the date of such L/C Credit Extension, such statements are true):
(a)      the representations and warranties contained in Section 4.01 (excluding, in the case of Borrowings, clauses (g) and (i)(i) of Section 4.01 ) are correct in all material respects (or, with respect to representations and warranties modified by materiality standards, in all respects) on and as of the date of such date, before and after giving effect to such Borrowing or such Letter of Credit Extension and to the application of the proceeds therefrom, as though made on and as of such date except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been correct in all material respects (or, with respect to representations and warranties modified by materiality standards, in all respects) on and as of such earlier date (other than in the case of the representations and warranties made in Section 4.01(d) , which shall be correct in all material respects on and as of such date of Borrowing or date of L/C Credit Extension as though made on and as of such date, without regard to any earlier date referenced therein);
(b)      no event has occurred and is continuing, or would result from such Borrowing or from the application of the proceeds therefrom or such L/C Credit Extension that constitutes a Default; and
(c)      the Administrative Agent and, if applicable, the applicable L/C Issuer or the Swing Line Lender shall have received an Advance Notice or Letter of Credit Application, as applicable, in accordance with the requirements hereof.
Section 3.03      Determinations Under Section 3.01 . For purposes of determining compliance with the conditions specified in Section 3.01 , each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible for the transactions

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contemplated by this Agreement shall have received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed Effective Date, specifying its objection thereto. The Administrative Agent shall promptly notify the Lenders and the Borrower of the occurrence of the Effective Date.
ARTICLE IV     

REPRESENTATIONS AND WARRANTIES
Section 4.01      Representations and Warranties of the Parent and the Borrower . Each of the Parent and the Borrower represents and warrants as follows:
(a)      Each Loan Party (i) is duly organized or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, (ii) is duly qualified and in good standing in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed is not reasonably likely to have a Material Adverse Effect and (iii) has all requisite power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted except where failure to possess such power or authority is not reasonably likely to have a Material Adverse Effect.
(b)      Set forth on Schedule 4.01(b) hereto is a complete and accurate list of all Subsidiaries of the Parent as of the Effective Date, showing as of such date (as to each such Subsidiary) the jurisdiction of its incorporation or organization. All of the outstanding capital stock of all such Subsidiaries has been validly issued, is fully paid and non-assessable and, other than directors’ qualifying shares, is owned by the Parent or one or more of its Subsidiaries free and clear of all Liens (other than Permitted Liens). The Borrower has no Subsidiaries as of the Effective Date. Each such Subsidiary (i) is duly organized or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, (ii) is duly qualified and in good standing in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed is not reasonably likely to have a Material Adverse Effect and (iii) has all requisite power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted except where failure to possess such power or authority is not reasonably likely to have a Material Adverse Effect.
(c)      The execution, delivery and performance by each Loan Party of this Agreement, the Notes and each other Loan Document to which it is or is to be a party, and the incurrence of the obligations provided for herein and therein, are within such Loan Party’s corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene such Loan Party’s charter or bylaws, (ii) violate any law (including, without limitation, the Exchange Act), rule, regulation (including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default under, any contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument binding on or

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affecting any Loan Party, any of its Subsidiaries or any of their properties or (iv) except as otherwise provided for under this Agreement, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, the violation or breach of which is reasonably likely to have a Material Adverse Effect.
(d)      No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body or any other third party is required for (i) the due execution, delivery, or performance by any Loan Party of this Agreement, the Notes or any other Loan Document to which it is or is to be a party, or (ii) the exercise by the Administrative Agent or any Lender of its rights under the Loan Documents as of Effective Date, except for the authorizations, approvals, actions, notices and filings listed on Schedule 4.01(d) , all of which have been duly obtained, taken, given or made and are in full force and effect, and reports required to be filed with the SEC as described in Section 5.01(h)(x) .
(e)      This Agreement has been, and each of the Notes and each other Loan Document when delivered hereunder will have been, duly executed and delivered by each Loan Party party thereto. This Agreement is, and each of the Notes and each other Loan Document when delivered hereunder will be, the legal, valid and binding obligation of each Loan Party party thereto, enforceable against such Loan Party in accordance with its terms except as the same may be limited by bankruptcy, insolvency and other similar laws affecting the rights of creditors generally and the availability of equitable remedies for the enforcement of certain obligations contained herein or therein and as may be limited by equitable principles generally.
(f)      The Consolidated balance sheets of the Parent and its Subsidiaries as at December 31, 2016, and the related Consolidated statements of income and Consolidated statement of cash flows of the Parent and its Subsidiaries for the fiscal year then ended, and the Consolidated balance sheets of the Parent and its Subsidiaries as at March 31, 2017, and the related Consolidated statements of income and Consolidated statement of cash flows of the Parent and its Subsidiaries for the three months then ended, duly certified by the chief financial officer of the Parent, copies of which have been furnished to each Lender in accordance with Section 5.01(h) of the Existing Credit Agreement, fairly present, subject, in the case of said balance sheets as at March 31, 2017, and said statements of income and cash flows for the three months then ended, to year-end audit adjustments, the Consolidated financial condition of the Parent and its Subsidiaries as at such dates and the Consolidated results of the operations of the Parent and its Subsidiaries for the periods ended on such dates, all in accordance with GAAP applied on a consistent basis.
(g)      Since December 31, 2016, there has been no Material Adverse Change.
(h)      No written information, exhibit or report furnished by any Loan Party to any Agent or any Lender in connection with the negotiation of the Loan Documents or pursuant to the terms of the Loan Documents contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made therein not misleading in light of the circumstances under which they were made.

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(i)      There is no action, suit, investigation, litigation or proceeding affecting any Loan Party or, to the knowledge of the Loan Parties, after commercially reasonable diligence, any of its Subsidiaries pending or, to the knowledge of the Loan Parties, after commercially reasonable diligence, threatened before any court, governmental agency or arbitrator that (i) as of the Effective Date would be reasonably likely to have a Material Adverse Effect (other than the matters described on Schedule 4.01(i) hereto (the “ Disclosed Litigation ”)) and there has been no change or other development in the Disclosed Litigation which is reasonably likely to result in a Material Adverse Change, or (ii) purports to affect the legality, validity or enforceability of this Agreement, any Note or any other Loan Document or the consummation of the transactions contemplated hereby.
(j)      Following application of the proceeds of each Advance, not more than 25 percent of the value of the assets (of the Borrower or of the Parent and its Subsidiaries on a Consolidated basis) subject to the provisions of Section 5.02(a) or 5.02(c) or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Debt and within the scope of Section 6.01(e) will be margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System). Neither the making of any Advance nor the use of proceeds thereof will violate or be inconsistent with the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System.
(k)      No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan or Multiemployer Plan that has resulted in or is reasonably expected to result in a Material Adverse Effect.
(l)      No Plan is “at risk” as defined in Section 430(i)(4) of the Internal Revenue Code.
(m)      Neither any Loan Party nor any ERISA Affiliate has incurred or is reasonably expected to incur (i) any liability under Section 4064 or 4069 of ERISA or (ii) any Withdrawal Liability to any Multiemployer Plan that in either event has resulted or would be reasonably likely to result in a Material Adverse Effect.
(n)      Neither any Loan Party nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and, to the best knowledge of any Loan Party or any ERISA Affiliate, no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA.
(o)      Each Loan Party and each of its Subsidiaries has filed, has caused to be filed or has been included in all tax returns (Federal, state, local and foreign) required to be filed and has paid all taxes shown thereon to be due, together with applicable interest and penalties, except (i) where failure to file such tax returns or pay such taxes would not reasonably be expected to have a Material Adverse Effect or (ii) for such taxes that are being contested in good faith by appropriate proceedings for which adequate reserves have been provided in accordance with GAAP.



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(p)      Neither any Loan Party nor any of its Subsidiaries is an “investment company”, or a company “controlled by” an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended (except that for purposes of this sentence, the term “Subsidiary” shall not include any “investment company” a majority of which is owned by a Loan Party or one of its Affiliates as a result of the initial seed capital contributed by such Loan Party or such Affiliate to such “investment company” for its shares). Neither the making of any Advances nor the application of the proceeds or repayment thereof by the Borrower, nor the consummation of the other transactions contemplated hereby, will violate any provision of such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder.
(q)      Each Subsidiary of the Parent engaged in advisory or management activities, if any, is duly registered as an investment adviser as and to the extent required under the Investment Advisers Act of 1940, as amended, and the rules and regulations promulgated thereunder. Each Subsidiary of the Parent engaged in the broker-dealer business, if any, is duly registered as a broker-dealer as and to the extent required under the Exchange Act, as amended, and the rules and regulations promulgated thereunder and, as and to the extent required is a member in good standing of the Financial Institutions Regulatory Authority, Inc.
(r)      As of the Effective Date, neither the Parent nor any of its Subsidiaries is in default and no waiver of default is in effect with respect to the payment of any principal or interest of any Existing Debt for borrowed money.
(s)      Each Loan Party (other than any Loan Party that is a Finance Subsidiary) is, together with its Subsidiaries, Solvent.
(t)      Neither the Borrower, nor any of its Subsidiaries, nor, to the knowledge of the Borrower and its Subsidiaries, any director, officer, employee, or affiliate thereof, is an individual or entity that is currently a Sanctioned Person.
(u)      The Borrower and its Subsidiaries conduct their businesses in compliance in all material respects with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other jurisdictions applicable to the Borrower and its Subsidiaries and the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions applicable to the Borrower and its Subsidiaries and the rules and regulations thereunder, and have instituted and maintain policies and procedures designed to promote and achieve compliance in all material respects with such laws.
(v)      Neither the Borrower nor the Parent is an EEA Financial Institution for the purposes of Bail-In Legislation.
ARTICLE V     

COVENANTS OF THE BORROWER
Section 5.01      Affirmative Covenants . So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder or any Letter of Credit or other L/C Obligation shall remain outstanding (except any Letters of Credit or L/C Obligations that remain

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outstanding after the Commitments have been terminated for which Cash Collateral has been provided), each of the Parent and the Borrower will:
(a)      Compliance with Laws, Etc . Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include (to the extent applicable), without limitation, compliance with the Investment Company Act of 1940, Investment Advisers Act of 1940, as amended, ERISA and Environmental Laws, except where the failure to do so would not, and would not be reasonably expected to, have a Material Adverse Effect.
(b)      Payment of Taxes, Etc . Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, all taxes, assessments, claims and governmental charges or levies imposed upon it or upon its property, except to the extent that any failure to do so would not, and would not be reasonably expected to, have a Material Adverse Effect; provided, however , that neither the Parent nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, claim or charge that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained.
(c)      Preservation of Corporate Existence, Etc . Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its existence, legal structure, rights (charter and statutory), permits, licenses, approvals, registrations, privileges and franchises and preserve and maintain the Parent’s and the Borrower’s legal names and the Borrower’s jurisdiction of formation; provided, however , the Parent and its Subsidiaries may consummate any merger or consolidation permitted under Section 5.02(b) ; and provided further that (i) no Subsidiary of the Parent other than the Borrower shall be required to maintain its existence, (ii) neither the Parent nor any of its Subsidiaries shall be required to preserve or maintain any legal structure, right, permit, license, approval, registration, privilege or franchise, unless, in any such case with respect to (i) or (ii) above, the failure to do so would, or would be reasonably expected to, (A) have a Material Adverse Effect or (B) release any Loan Party from its obligations under any Loan Document, and (iii) the Parent and/or the Borrower may change its legal name and the Borrower may change its jurisdiction of formation (so long as, subject to Section 8.11 , no Lender is prohibited by applicable law to extend credit to a Person formed in such new jurisdiction) after having given 10 days prior written notice to the Administrative Agent and the Lenders and promptly delivering, upon effecting such name or jurisdiction change, evidence from the applicable Governmental Authority of such name or jurisdiction change.
(d)      Visitation Rights . At any reasonable time and from time to time, permit the Administrative Agent or any of the Lenders or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Parent and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Parent and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants, all of which shall be at the expense of the Borrower upon and during the continuance of an Event of Default.
(e)      Keeping of Books . Keep, and cause each of its Significant Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Parent and each such Significant

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Subsidiary in accordance with GAAP or other accounting principles applicable to such Person in effect from time to time.
(f)      [Intentionally Omitted]
(g)      Use of Proceeds . Use the proceeds of the Advances solely as provided in Section 2.17 and otherwise in accordance with the terms hereof.
(h)      Reporting Requirements . Furnish to the Administrative Agent and the Lenders:
(i)      as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Parent, a copy of the Form 10-Q filed with the Securities and Exchange Commission for such quarter for the Parent and its Subsidiaries, containing a Consolidated balance sheet of the Parent and its Subsidiaries as of the end of such quarter and a Consolidated statement of income and Consolidated cash flows of the Parent and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer or the treasurer of the Parent as having been prepared in accordance with GAAP and a Compliance Certificate of the chief financial officer or the treasurer of the Parent as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Sections 5.03(a) and (b) ;
(ii)      as soon as available and in any event within 90 days after the end of each fiscal year of the Parent, a copy of the Form 10-K filed with the Securities and Exchange Commission for such year for the Parent and its Subsidiaries, containing a Consolidated balance sheet of the Parent and its Subsidiaries as of the end of such fiscal year and a Consolidated statement of income and Consolidated cash flows of the Parent and its Subsidiaries for such fiscal year, in each case accompanied by (i) a report and opinion as to such Consolidated financial statements by PricewaterhouseCoopers LLP or other independent public accountants approved by the audit committee of the Parent’s board of directors and, if other than Deloitte & Touche LLP, KPMG LLP, or Ernst & Young LLP, reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with applicable audit standards, and which report and opinion shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit, and (ii) a Compliance Certificate of the chief financial officer or the treasurer of the Parent as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Sections 5.03(a) and (b) ;
(iii)      as soon as possible and in any event within five days after the occurrence of each Default continuing on the date of such statement, a statement of the chief financial officer or the treasurer of the Parent setting forth details of such Default and the action that the Parent has taken and proposes to take with respect thereto;


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(iv)      promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting the Parent or any of its Subsidiaries of the type described in Section 4.01(i) ;
(v)      (A) promptly and in any event within 20 days after any Loan Party or any ERISA Affiliate knows or has reason to know that (1) any ERISA Event has occurred which could result in a material liability of any Loan Party or any ERISA Affiliate, or (2) any Loan Party or any ERISA Affiliate has incurred or is reasonably expected to incur a material liability under Section 4064 or 4069 of ERISA, a statement of a director of the Borrower describing such ERISA Event and the circumstances giving rise to, and the amount of such liability and the action, if any, that such Loan Party or such ERISA Affiliate has taken and proposes to take with respect thereto and (B) within two Business Days of the date any records, documents or other information must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA, a copy of such records, documents and information;
(vi)      promptly and in any event within two Business Days after receipt thereof by any Loan Party or any ERISA Affiliate, copies of each notice from the PBGC stating its intention to terminate any Plan or Multiemployer Plan or to have a trustee appointed to administer any Plan or Multiemployer Plan;
(vii)      promptly upon request from the Administrative Agent or any Lender, copies of each Schedule SB (Single Employer Defined Benefit Plan Actuarial Information) to the annual report (Form 5500 Series) required to be filed with respect to each Plan whose funding target attainment percentage (as defined in Section 430(d) of the Internal Revenue Code) is less than 100%;
(viii)      promptly and in any event within 20 days after receipt thereof by any Loan Party or any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of each notice concerning (A) the imposition on any Loan Party or any ERISA Affiliate of Withdrawal Liability in a material amount by any such Multiemployer Plan, (B) the reorganization or termination, within the meaning of Title IV of ERISA, of any such Multiemployer Plan or (C) the amount of liability incurred, or that may be incurred, by any Loan Party or any ERISA Affiliate in connection with any event described in clause (A) or (B);
(ix)      [Intentionally Omitted]
(x)      promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Parent, and copies of all annual, regular, periodic and special reports and registration statements which the Parent may file or be required to file with the SEC under Section 13 or 15(d) of the Exchange Act, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;
(xi)      promptly, of any announcement by Moody’s or S&P of any change in a Debt Rating or outlook; and

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(xii)      such other information respecting the Parent or any of its Subsidiaries as the Administrative Agent or any Lender acting through the Administrative Agent may from time to time reasonably request.
Documents required to be delivered pursuant to Section 5.01(h)(i) or (ii) may be delivered electronically by e-mailing such information to an e-mail address of the Administrative Agent as specified to the Borrower by the Administrative Agent from time to time. The Administrative Agent shall promptly post such documents on the Borrower’s behalf onto the Platform. Such information shall be deemed to have been delivered to the Lenders on the date such documents are posted to the Platform. In addition, such documents may be delivered by posting the documents on the Parent’s website on the Internet, and if so delivered, shall be deemed to have been delivered on the date on which the Parent posts such documents, or provides a link thereto on the Parent’s website on the Internet at the website address listed on Schedule 8.02 ; provided that the Parent shall notify the Administrative Agent (by facsimile or electronic mail) of the posting of any such documents and, if requested by the Administrative Agent, provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide copies of the Compliance Certificate required by Section 5.01(h)(i) and (ii) to the Administrative Agent by facsimile or electronic mail. Except for such Compliance Certificate, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Parent with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
The Parent and the Borrower hereby acknowledge that (a) the Administrative Agent and/or the Arrangers will make available to the Lenders and the L/C Issuers information provided by or on behalf of the Parent and/or the Borrower hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “ Platform ”) and (b) certain of the Lenders may be “public-side” Lenders ( i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “ Public Lender ”). Each of the Parent and the Borrower hereby agree that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC”, the Parent and the Borrower shall be deemed to have authorized the Administrative Agent, each Arranger, the L/C Issuers and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Parent and the Borrower or its securities for purposes of United States Federal and state securities laws ( provided, however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 8.07 ); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor”; and (z) the Administrative Agent and each Arranger shall be entitled to treat the Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.”



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(i)      Conduct its businesses in compliance in all material respects with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other jurisdictions applicable to it and the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions applicable to it and the rules and regulations thereunder, and maintain policies and procedures designed to promote and achieve compliance in all material respects with such laws.
Section 5.02      Negative Covenants . So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder or any Letter of Credit or other L/C Obligation shall remain outstanding (except for any Letters of Credit or L/C Obligations that remain outstanding after the Commitments have been terminated for which Cash Collateral has been provided), neither the Parent nor the Borrower will at any time:
(a)      Liens, Etc . Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any accounts or other right to receive income, excluding , however , from the operation of the foregoing restrictions the following:
(i)      Permitted Liens;
(ii)      Liens granted pursuant to any Loan Document;
(iii)      Liens on deposit accounts of the Parent and its Subsidiaries in respect of their cash pooling operations;
(iv)      purchase money Liens upon or in real property or equipment acquired or held by the Parent or any of its Subsidiaries in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition of any such property or equipment, or Liens existing on any such property or equipment at the time of acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property); provided , however , that no such Lien shall extend to or cover any properties of any character other than the property or equipment being acquired, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced; and provided further that the aggregate principal amount of the Debt secured by Liens permitted by this clause (iv) and clause (v) below shall not exceed $100,000,000 at any time outstanding;
(v)      Liens on property of a Person existing at the time such Person is merged into or consolidated with the Parent or any Subsidiary of the Parent or becomes a Subsidiary of the Parent; provided that such Liens were not created in contemplation of such merger, consolidation or investment and do not extend to any assets other than those of the Person merged into or consolidated with the Parent or such Subsidiary or acquired by the Parent or such Subsidiary; provided , further , that the aggregate principal amount


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of the Debt secured by Liens permitted by this clause (v) and clause (iv) above shall not exceed $100,000,000 at any time outstanding;
(vi)      Liens arising pursuant to one or more securitization programs permitted pursuant to Section 5.02(c)(ii) ;
(vii)      the replacement, extension or renewal of any Lien permitted by clauses (iv) and (v) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or addition of any direct or contingent obligor) of the Debt secured thereby;
(viii)      Liens existing as of the Effective Date as described on Schedule 5.02(a) ;
(ix)      Liens which are floating charges under English law in the form of an “industry standard” granted by Invesco Perpetual Life Limited (“ IPLL” ) on its revolving business assets (without attaching to any particular asset until the floating charge crystallises on insolvency events which will result in steps being taken to make payment of a dividend to creditors or where the reinsurance creditor reasonably considers this may happen) to reinsurance creditors to support the obligations of IPLL thereto under reinsurance contracts and limited in the amount secured to the amount which would have been recoverable had the secured amount been an unsecured debt owed to a direct policy holder of IPLL;
(x)      Liens to secure Subsidiary Non-Recourse Debt, provided that no such Lien shall extend to or cover any properties or assets other than the property or assets being acquired with such Subsidiary Non-Recourse Debt and proceeds thereof;
(xi)      Liens on assets sold and leased back pursuant to sale and leaseback transactions permitted by Section 5.02(c)(vii) ;
(xii)      Liens securing Permitted Unit Investment Trust Debt;
(xiii)      Liens consisting of statutory, common law or contractual setoff rights provided by the Parent and its Subsidiaries in the ordinary course of business;
(xiv)      Liens not otherwise permitted by this Section 5.02(a) on assets of the Parent and its Subsidiaries securing Debt or other obligations in the aggregate principal amount not to exceed $10,000,000 at any time outstanding; and
(xv)      Cash deposits and/or securities securing obligations in respect of Hedge Agreements entered into for the purpose of asset or liability management.
(b)      Mergers, Etc . Merge into or consolidate with any Person or permit any Person to merge into it, or permit any of its Subsidiaries to do so, except that
(i)      Parent or any Subsidiary of the Parent may merge or consolidate with any other Subsidiary (including any Excluded Subsidiary) of the Parent, provided that if the

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Parent or the Borrower merge or consolidate with any such Subsidiary, the Parent or the Borrower, as applicable, shall be the surviving entity; and
(ii)      any Subsidiary of the Parent may merge with any other Person , provided that such merger does not result in the loss by the Parent in any fiscal year of business operations or assets which, when aggregated with all other such mergers and all dispositions of assets permitted by Section 5.02(c)(iii) (taking into account the proviso in such Section 5.02(c)(iii) ) for such fiscal year, generated more than twenty percent (20%) of the Consolidated operating income of the Parent during the immediately preceding fiscal year of the Parent;
provided , however , that in each case, immediately after giving effect thereto, (A) no event shall occur and be continuing that constitutes a Default, (B) if the Borrower is party to such merger or consolidation, then the Borrower is the surviving corporation or company, as the case may be; and (C) in the case of any merger or consolidation to which the Parent is a party, then the Parent is the surviving company; and provided further, that in each case, the representations and warranties contained in Section 4.01(a) with respect to the Borrower shall at all times be true and correct in all respects (except with respect to the good standing of the Borrower, which shall be true and correct in all material respects).
(c)      Sales, Etc. of Assets . Sell, lease (as lessor), transfer or otherwise dispose of, or permit any of its Subsidiaries to sell, lease (as lessor), transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except:
(i)      in a transaction authorized by subsection (b) of this Section;
(ii)      the sale or other disposition to a third-party investor by the Parent or any of its Subsidiaries of its rights to receive distribution fees and contingent deferred sales charges pursuant to a securitization program;
(iii)      the Parent and its Subsidiaries may, during any fiscal year of the Parent (the " Test Year "), sell, lease, transfer or otherwise dispose of assets (including equity securities owned by such Persons) which, when aggregated with all other such dispositions and all mergers permitted by Section 5.02(b)(ii) (where such merger resulted in the loss by the Parent or a Subsidiary, as applicable, of business operations or assets) for such Test Year, generated up to, but not exceeding, twenty percent (20%) of the Consolidated operating income of the Parent during the immediately preceding fiscal year of the Parent; provided , that any determination of compliance with this clause (iii) shall take into account contributions to Consolidated operating income as measured on a pro forma basis for such immediately preceding fiscal year resulting from any acquisition by the Parent or its Subsidiaries of operating assets (or acquisition of equity securities of any Person holding such assets) that occurred during such Test Year or that is anticipated to occur within the twelve (12) month period immediately following the date on which the Parent or its Subsidiary, as applicable, shall have entered into a definitive agreement for such acquisition if such definitive agreement is entered into during such Test Year.


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(iv)      the Parent and any Subsidiary of the Parent may sell, lease, transfer or otherwise dispose of any or all of its assets to the Parent or any other Subsidiary (including any Excluded Subsidiary) of the Parent, except that neither the Parent nor the Borrower shall be permitted to sell, lease, transfer or otherwise dispose of its assets to any Excluded Subsidiary under this clause (iv) ;
(v)      sales or other dispositions of obsolete equipment and furniture;
(vi)      sales of assets pursuant to sale and leaseback transactions; and
(vii)      the sale, transfer or other disposition of cash, cash equivalents and securities in the ordinary course of business.
(d)      Change in Nature of Business . Make, or permit any of its Significant Subsidiaries to make, any material change in the nature of its business as carried on at the date hereof; provided , however, that nothing contained herein shall restrict or limit such Persons from engaging in any business (including by way of investment or acquisition) that is reasonably related, complimentary or ancillary to the businesses of the Parent and its Subsidiaries carried on as of the date hereof.
(e)      Accounting Changes . Make or permit, or permit any of its Significant Subsidiaries to make or permit, any material change in accounting policies or reporting practices, except (i) as required by Securities Laws, the SEC or GAAP applicable to the Parent or such Significant Subsidiary, (ii) with respect to any Significant Subsidiary, to adopt GAAP, or (iii) any change by a Significant Subsidiary to International Financial Reporting Standards or other primarily generally accepted accounting principles in the relevant jurisdiction as may be required by applicable regulatory authorities.
(f)      Transactions with Affiliates . Conduct, or permit any of its Subsidiaries to conduct, transactions material to business of the Parent, the Borrower or such Subsidiary with any of their Affiliates except in the ordinary course of business of and pursuant to the reasonable requirements of the Parent’s, the Borrower’s or such Subsidiary’s business and upon fair and reasonable terms that are not materially less favorable to the Parent, the Borrower or such Subsidiary, as the case may be, than those which would be obtained in a comparable arm’s-length transaction with a Person not an Affiliate; provided that the foregoing restrictions shall not apply to:
(i)      any transaction (A) between or among the Parent and its Subsidiaries (including Excluded Subsidiaries) not involving any other Affiliates, (B) with any Special Purpose Subsidiary (including any Special Purpose Subsidiary that is an Excluded Subsidiary), and (C) between the Parent or any of its Subsidiaries and their respective employees to make loans to such employees for purposes of exercising stock options of such employees and paying tax liabilities of such employees associated therewith, provided that the total of all such loans shall not exceed $25,000,000 in an aggregate principal amount at any one time outstanding;
(ii)      any transaction between or among (A) the Parent or any Subsidiary (including any Excluded Subsidiary) and (B) any Person sponsored by the Parent or any


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Subsidiary (including any Excluded Subsidiary) or for which the Parent or any Subsidiary (including any Excluded Subsidiary) provides advisory, administrative, supervisory, management, consulting, underwriting or similar services, provided that such transaction is not prohibited under the Investment Company Act of 1940, the Investment Advisers Act of 1940 or other applicable law, rule, regulation or order; and
(iii)      any transaction with an Affiliate so long as such transaction is approved by a majority of the Disinterested Directors of the Parent or the applicable Subsidiary who is entering into such transaction with such Affiliate.
(g)      Subsidiary Debt . Permit its Subsidiaries, other than (1) the Borrower and (2) any Finance Subsidiary (subject to the last sentence of this subsection (g) ), collectively to create or incur Adjusted Debt attributable to such Subsidiaries if immediately after giving effect to such creation or incurrence, the aggregate principal amount of Adjusted Debt attributable to such Subsidiaries would exceed the greater of (A) $500,000,000 and (B) thirty percent (30%) of EBITDA for the four consecutive fiscal quarters ended on or immediately prior to such time; provided, however , that the foregoing restriction shall not apply to any (i) Adjusted Debt attributable to a Subsidiary (including any Person that will be or become a Subsidiary) of the Parent (including any refinancings, amendments or extensions of such Adjusted Debt that do not increase, or provide for the increase of, the aggregate principal amount of such Adjusted Debt) that is assumed in connection with (but not established in contemplation of) (A) a transaction that is permitted pursuant to Section 5.02(b) or (B) the purchase or acquisition of all of the capital stock of, or all or substantially all of the assets of, another Person, (ii) Subsidiary Non-Recourse Debt, (iii) letters of credit entered into pursuant to and in accordance with regulatory requirements in the ordinary course of such Subsidiary's unit investment trust business, (iv) Permitted Unit Investment Trust Debt to the extent that (A) any such Debt is not outstanding for longer than 5 consecutive Business Days, and (B) so long as such Debt is outstanding, it is supported by readily marketable securities that are in an amount sufficient to repay such Debt and accrued interest thereon and fees associated therewith and that are held in trust or otherwise set aside for the repayment of such Permitted Unit Investment Trust Debt, or if there is an insufficiency in such amount, the amount of such insufficiency shall be otherwise permitted under this Section 5.02(g) , and (v) guarantee by a Subsidiary of any Debt qualifying under clauses (i) through (iv) of this Section 5.02(g) . For the avoidance of doubt, “Adjusted Debt” shall exclude (x) Debt of any Subsidiary owing to the Parent or any other Subsidiary and (y) Debt of the Parent owing to any Subsidiary. With respect to any Non-Loan Party Finco, such Non-Loan Party Finco shall only be excluded from the foregoing restrictions so long as such Non-Loan Party Finco remains a Finance Subsidiary; provided that, in the event a Non-Loan Party Finco shall make any loan or other advance (a “ Finco Loan ”) to any Subsidiary of the Parent that is not a Loan Party (such Subsidiary, a “ Finco Loan Recipient ”), such Finco Loan shall be subject to an intercreditor agreement among all Finco Loan Recipients effectively providing for pari passu treatment with respect to the Obligations and the Debt of each Non-Loan Party Finco, such intercreditor agreement to be in form and substance reasonably satisfactory to the Administrative Agent. So long as doing so would not result in a Non-Loan Party Finco ceasing to be or qualify as a Finance Subsidiary, each Non-Loan Party Finco that makes a Finco Loan to a Finco Loan Recipient shall provide an acknowledgment and consent to such intercreditor agreement (and in the event such acknowledgment and consent would result in a Non-Loan Party Finco ceasing to be or qualify as a Finance Subsidiary, the Parent shall instead

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provide an acknowledgment and consent to such intercreditor agreement for itself and on behalf of its Subsidiaries).
(h)      Sanctions . Directly or, to its knowledge, indirectly, use the proceeds of any extension of credit hereunder, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other individual or entity, to fund any activities of or business with any individual or entity that, at the time of such funding, is a Sanctioned Person.
(i)      Anti-Corruption Laws . Directly or, to its knowledge, indirectly use the proceeds of any extension of credit hereunder for any purpose which would violate the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, or other similar anti-corruption legislation in other jurisdictions applicable to it or the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions applicable to it or the rules and regulations thereunder.
Section 5.03      Financial Covenants . So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder or any Letter of Credit or other L/C Obligation shall remain outstanding, the Parent will:
(a)      Debt/EBITDA Ratio . Maintain at the end of each fiscal quarter of the Parent a Debt/EBITDA Ratio not greater than 3.25 to 1.00.
(b)      Coverage Ratio . Maintain at the end of each fiscal quarter of the Parent a ratio of EBITDA for the four consecutive fiscal quarters of the Parent ended on or immediately prior to the date of determination to interest expense attributable to, and amortization of debt discount in respect of, Adjusted Debt (excluding from Adjusted Debt for purposes of this Section 5.03(b) (i) Subsidiary Non-Recourse Debt and (ii) so long as the Parent and its Subsidiaries own 100% of the Office Equipment Sale and Leaseback Bonds, liabilities with respect to the Office Equipment Sale and Leaseback Lease, in each case to the extent otherwise included in Adjusted Debt) for such period, of not less than 4.00 to 1.00.
ARTICLE VI     

EVENTS OF DEFAULT
Section 6.01      Events of Default . If any of the following events (“ Events of Default ”) shall occur and be continuing:
(a)      The Borrower shall fail to pay any principal of any Advance or any L/C Obligation when the same becomes due and payable; the Borrower shall fail to provide any Cash Collateral required by Section 2.03(a)(ii)(B) on or prior to the Letter of Credit Expiration Date; or the Borrower shall fail to pay any interest on any Advance or any L/C Obligation or make any other payment of fees or other amounts payable under this Agreement or any Note within three Business Days after the same becomes due and payable; or
(b)      Any representation or warranty made by any Loan Party under any Loan Document or by the Parent or the Borrower (or any of its respective officers) in connection with any Loan Document shall prove to have been incorrect in any material respect when made; or

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(c)      (i) The Parent or the Borrower shall fail to perform or observe any term, covenant or agreement contained in Sections 5.01(c) , (d) or (h) , 5.02 or 5.03 , or (ii) the Parent or the Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or
(d)      (i) The Parent or any of its Default Subsidiaries shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal or notional amount of at least $75,000,000 (or the equivalent thereof in any other currencies) in the aggregate (but excluding Debt outstanding hereunder and Debt under Hedge Agreements) of the Parent or such Default Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt (excluding, for the avoidance of doubt, Debt under Hedge Agreements) and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt (excluding, for the avoidance of doubt, Debt under Hedge Agreements) shall be declared to be due and payable, or required to be prepaid or redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt (excluding, for the avoidance of doubt, Debt under Hedge Agreements) shall be required to be made, in each case prior to the stated maturity thereof or (ii) there occurs, under any Hedge Agreement to which the Parent or any of its Default Subsidiaries is a party, an Early Termination Date (as defined in such Hedge Agreement) resulting from (A) any event of default under such Hedge Agreement as to which the Parent or such Default Subsidiary is the Defaulting Party (as defined in such Hedge Agreement) or (B) any Termination Event (as defined in such Hedge Agreement) under such Hedge Agreement as to which the Parent or such Default Subsidiary is an Affected Party (as defined in such Hedge Agreement) and, in either event, the Hedge Termination Value owed by the Parent or such Default Subsidiary as a result thereof is greater than $75,000,000 and such Hedge Termination Value remains unpaid beyond the applicable grace period, if any, specified in such Hedge Agreement; provided , that, if any such event of default or Termination Event is rescinded or waived under such Hedge Agreement, the resulting Event of Default under this clause (ii) shall be deemed to be waived and shall no longer exist; or
(e)      The Parent or any of its Default Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Parent or any of its Default Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 45 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order

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for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Parent or any of its Default Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or
(f)      Any judgment or order for the payment of money in excess of $75,000,000 (or the equivalent thereof in any other currencies) shall be rendered against the Parent or any of its Default Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided , however , that any such judgment or order shall not be an Event of Default under this Section 6.01(f) if and for so long as (i) the amount of such judgment or order in excess of $75,000,000 (or the equivalent thereof in any other currencies) is covered by a valid and binding policy of insurance between the defendant and the insurer covering payment thereof and (ii) such insurer, which shall be rated at least “A” by A.M. Best Company, has been notified of, and has not disputed the claim made for payment of, the amount of such excess amount; or
(g)      Any non-monetary judgment or order shall be rendered against the Parent or any of its Subsidiaries that could be reasonably expected to have a Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or
(h)      (i) Any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Exchange Act), directly or indirectly, of Voting Stock of the Parent (or other securities convertible into such Voting Stock) representing 33% or more of the combined voting power of all Voting Stock of the Parent; or (ii) during the period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Parent cease to be composed of individuals (A) who were members of that board or equivalent governing body on the first day of such period, (B) whose election or nomination to that board or equivalent governing body was approved (including approval solely for purposes of satisfying this provision) by individuals referred to in clause (A) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (C) whose election or nomination to that board or other equivalent governing body was approved (including approval solely for purposes of satisfying this provision) by individuals referred to in clauses (A) and (B) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; or
(i)      Any ERISA Event shall have occurred with respect to a Plan, or any Loan Party or any ERISA Affiliate shall have incurred or be reasonably expected to incur liability under Section 4064 or 4069 of ERISA, and the sum (determined as of the date of occurrence of such ERISA Event) of the Insufficiency of such Plan and the Insufficiency of any and all other Plans with respect to which an ERISA Event shall have occurred and then exist (or the liability of the Loan Parties and the ERISA Affiliates incurred or expected to be incurred with respect to Section 4064 or 4069 of ERISA or related to such ERISA Event) exceeds $37,500,000; or


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(j)      Any Loan Party or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer Plan in an amount that, when aggregated with all other amounts required to be paid to Multiemployer Plans by the Loan Parties and the ERISA Affiliates as Withdrawal Liability (determined as of the date of such notification), exceeds $37,500,000 or requires payments exceeding $7,500,000 per annum; or
(k)      Any Loan Party or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, and as a result of such reorganization or termination the aggregate annual contributions of the Loan Parties and the ERISA Affiliates to all Multiemployer Plans that are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the plan years of such Multiemployer Plans immediately preceding the plan year in which such reorganization or termination occurs by an amount exceeding $37,500,000;
(l)      Any Governmental Authority or regulatory body shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and which prohibits, enjoins or otherwise restricts the Parent or any of its Subsidiaries in a manner that has a Material Adverse Effect; or
(m)      Any material provision of the Guaranty shall for any reason cease to be valid and binding on the Parent (other than by termination of the Guaranty) or the Parent shall so state in writing, but in either case, only if such event could reasonably be expected to have a Material Adverse Effect;
then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender to make Advances and any obligation of each L/C Issuer to make L/C Credit Extensions to be terminated, whereupon the same shall forthwith terminate, (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Advances and the Notes, all the L/C Borrowings, all interest thereon and all other amounts payable under this Agreement and the Notes to be forthwith due and payable and pursue all rights under any Guaranty, whereupon the Advances and the Notes, all the L/C Borrowings, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower and (iii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, require that the Borrower Cash Collateralize the outstanding Letters of Credit (in an amount equal to 100% of the then Outstanding Amount thereof); provided, however , that in the event of an actual or deemed entry of an order for relief with respect to the Parent or any Default Subsidiary under the bankruptcy code of the United States, or any other liquidation, conservatorship, bankruptcy, reorganization or other similar debtor relief laws of the United States, the United Kingdom or Bermuda, (A) the obligation of each Lender to make Advances and any obligation of any L/C Issuer to make L/C Credit Extensions shall automatically be terminated, (B) the Notes, all such interest and all such amounts (including without limitation all L/C Borrowings) shall automatically become and be due and payable, without presentment,

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demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower and (C) the obligation of the Borrower to Cash Collateralize the outstanding Letters of Credit as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.
Section 6.02      Application of Funds . After the exercise of remedies provided for in Section 6.01 (or after the Notes and the L/C Borrowings have automatically become immediately due and payable and the outstanding Letters of Credit have automatically been required to be Cash Collateralized as set forth in Section 6.01 ), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.18 and 8.16 , be applied by the Administrative Agent in the following order:
First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article II ) payable to the Administrative Agent in its capacity as such;
Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and L/C Issuers (including fees, charges and disbursements of counsel to the respective Lenders and the respective L/C Issuers and amounts payable under Article II ), ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third , to payment of that portion of the Obligations constituting accrued and unpaid interest on any L/C Borrowings (which have not been funded by L/C Advances) payable only to the L/C Issuers, and interest on any Swing Line Loans payable only to the Swing Line Lender, ratably among the L/C Issuers and the Swing Line Lender in proportion to the respective amounts described in this clause Third payable to them;
Fourth , to payment of that portion of the Obligations constituting unpaid principal of any L/C Borrowings (which have not been funded by L/C Advances) payable only to the L/C Issuers, and principal of Swing Line Loans payable only to the Swing Line Lender; ratably among the L/C Issuers and the Swing Line Lender in proportion to the respective amounts described in this clause Fourth payable to them;
Fifth , to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees, interest on any of the Advances (other than Swing Line Loans) and L/C Advances, payable to the Lenders, ratably among them in proportion to the respective amounts described in this clause Fifth held by them;
Sixth , to payment of that portion of the Obligations constituting unpaid principal on any of the Advances (other than Swing Line Loans) and L/C Advances, ratably among the Lenders in proportion to the respective amounts described in this clause Sixth held by them;
Seventh , to the Administrative Agent for the account of the L/C Issuers, to Cash Collateralize that portion of the L/C Obligations comprised of 100% of the aggregate undrawn amount of outstanding Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Sections 2.03 or 2.18 .

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Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by law.
Subject to Sections 2.03(c) and 2.18 , amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Seventh above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.
ARTICLE VII     

ADMINISTRATIVE AGENT
Section 7.01      Appointment and Authority . Each of the Lenders and each of the L/C Issuers hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuers, and no Loan Party shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
Section 7.02      Rights as a Lender . The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Parent, the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
Section 7.03      Exculpatory Provisions . The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(a)      shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;



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(b)      shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any debtor relief law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any debtor relief law; and
(c)      shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Parent, the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 6.01 and 8.01 ) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment, provided , such limitation of liability of the Administrative Agent shall not prohibit or limit any cause of action the Borrower may otherwise have against any Lender. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Borrower, a Lender or an L/C Issuer.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
Section 7.04      Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) reasonably believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and reasonably believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of an Advance, or the issuance, amendment, renewal or extension of a Letter of Credit,

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that by its terms must be fulfilled to the satisfaction of a Lender or an L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or such L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or such L/C Issuer prior to the making of such Advance or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Parent or the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in good faith in accordance with the advice of any such counsel, accountants or experts.
Section 7.05      Delegation of Duties . The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
Section 7.06      Resignation of Administrative Agent .
(a)      The Administrative Agent may at any time give notice of its resignation to the Lenders, the L/C Issuers and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States, which appointment shall, provided that no Event of Default exists, be subject to the Borrower’s approval (not to be unreasonably withheld or delayed). If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the L/C Issuers, appoint a successor Administrative Agent meeting the qualifications set forth above, which appointment shall, provided that no Event of Default exists, be subject to the Borrower’s approval (not to be unreasonably withheld or delayed), provided that in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.
(b)      If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d)  of the definition thereof, the Borrower and/or the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and appoint a successor, which appointment shall, provided that no Event of Default exists, be subject to the Borrower’s approval (not to be unreasonably withheld or delayed). If no such successor shall have been so appointed by the Required Lenders

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and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
(c)      With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and each L/C Issuer directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 2.15(l) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 8.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.
(d)      Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as an L/C Issuer and Swing Line Lender. If Bank of America resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of an L/C Issuer hereunder with respect to all Letters of Credit issued by it outstanding as of the effective date of its resignation as an L/C Issuer and all L/C Obligations with respect thereto, including the right to require the Lenders to make Base Rate Advances or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c) . If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c) . Upon the appointment by the Borrower of a successor L/C Issuer or Swing Line Lender hereunder (which successor shall in all cases be a Lender that is not a Defaulting Lender and that has consented to such appointment), (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as applicable, (b) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.

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Section 7.07      Non-Reliance on Administrative Agent and Other Lenders . Each Lender and each L/C Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and each L/C Issuer also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
Section 7.08      No Other Duties, Etc . Anything herein to the contrary notwithstanding, none of the Arrangers, Bookrunners, Syndication Agent or Co-Documentation Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or an L/C Issuer.
Section 7.09      Administrative Agent 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 any Loan Party, the Administrative Agent (irrespective of whether the principal of any Advance or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise
(a)      to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Advances, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuers and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuers and the Administrative Agent and their respective agents and counsel, and all other amounts, due the Lenders, the L/C Issuers and the Administrative Agent under Sections 2.03(h) and (i) , 2.05 and 8.04 ) allowed in such judicial proceeding; and
(b)      to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and each L/C Issuer to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuers, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.05 and 8 .04 .
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or any L/C Issuer any plan of

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reorganization, arrangement, adjustment or composition affecting any amount owing by a Loan Party to a Lender or the Administrative Agent or the rights of any Lender or any L/C Issuer or to authorize the Administrative Agent to vote in respect of the claim of any Lender or any L/C Issuer in any such proceeding.
Section 7.10      Certain ERISA Matters .
(a)      Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(i)      such Lender is not using “plan assets” of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments,
(ii)      the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(iii)      (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv)      such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(b)      In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has not provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a) , such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to,

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and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that:
(i)      none of the Administrative Agent, any Arranger or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto),
(ii)      the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is independent (within the meaning of 29 CFR § 2510.3-21) and is a bank, an insurance carrier, an investment adviser, a broker-dealer or other person that has under management or control, total assets of at least $50 million, in each case as described in 29 CFR § 2510.3-21(c)(1)(A)-(E),
(iii)      the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies,
(iv)      the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is a fiduciary under ERISA or the Internal Revenue Code, or both, with respect to the Loans, the Letters of Credit, the Commitments and this Agreement and is responsible for exercising independent judgment in evaluating the transactions hereunder, and
(v)      no fee or other compensation is being paid directly to the Administrative Agent, any Arranger or any their respective Affiliates for investment advice (as opposed to other services) in connection with the Loans, the Letters of Credit, the Commitments or this Agreement.
(c)      The Administrative Agent and each Arranger hereby informs the Lenders that each such Person is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitments and this Agreement, (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or

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collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.
ARTICLE VIII     

MISCELLANEOUS
Section 8.01      Amendments, Etc . No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however , that no such amendment, waiver or consent shall:
(a)      waive any condition set forth in Section 3.01 without the written consent of each Lender;
(b)      extend or increase the Commitment of any Lender (or reinstate any Commitment terminated), increase any Lenders pro rata share requirement to fund any Advance or participate in any Swing Line Loan or Letter of Credit (other than as set forth in Section 8.16 ), or require any Lender to make Advances or participate in Letters of Credit in any currency other than Dollars or Sterling, in each case, without the written consent of such Lender;
(c)      postpone any date fixed by this Agreement or any other Loan Document for any payment or mandatory prepayment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;
(d)      reduce the principal of, or the rate of interest specified herein on, any Advance or L/C Borrowing, or (subject to clause (iii) of the last proviso to this Section 8.01 ) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however , that only the consent of the Required Lenders shall be necessary to amend Section 2.08(b) or to waive any obligation of the Borrower to pay Letter of Credit Fees at rate equal to the Applicable Margin for Eurodollar Rate Advances plus 2% per annum;
(e)      change Section 2.16 or Section 6.02 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;
(f)      change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder without the written consent of each Lender;


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(g)      except in connection with permitted mergers under Section 5.02(b) , permitted asset sales under Section 5.02(c) and other transactions permitted hereunder, release the Parent from the Guaranty without the written consent of each Lender ; or
(h)      change Section 2.03(a)(ii) or change Section 2.03(b)(iii) in a manner that would (1) allow a Letter of Credit to have an expiry date more than twelve (12) months after the date of issuance or last extension, (2) change the conditions for the issuance or extension of a Letter of Credit having an expiry date later than the Letter of Credit Expiration Date, or (3) allow any Auto-Extension Letter of Credit to have an expiry date more than twelve months past the Letter of Credit Expiration Date, in each case, without the consent of each Lender;
and, provided further , that (i) no amendment, waiver or consent shall, unless in writing and signed by the applicable L/C Issuer in addition to the Lenders required above, affect the rights or duties of such L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders may be effected with the consent of all Lenders other than Defaulting Lenders), except that (i) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (ii) any waiver, amendment or other modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.
Section 8.02      Notices; Effectiveness; Electronic Communication .
(a)      Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i)      if to the Borrower, the Parent, the Administrative Agent, any L/C Issuer or the Swing Line Lender, to the address, telecopier number, electronic mail address(es) or telephone number specified for such Person on Schedule 8.02 ; and
(ii)      if to any other Lender, to the address, telecopier number, electronic mail address(es) or telephone number specified for such Lender’s Domestic Lending Office on Schedule I .

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Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).
(b)      Electronic Communications . Notices and other communications to the Lenders and the L/C Issuers hereunder, except for any notice of service of process under Section 8.12 or otherwise which shall be given in writing only as provided by applicable law, may be delivered or furnished by electronic communication (including e-mail, FpML messaging and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or any L/C Issuer pursuant to Article II if such Lender or such L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent, the Swing Line Lender, the L/C Issuers or the Borrower may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
(c)      The Platform . THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to the Parent, the Borrower, any Lender, any L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Parent’s, the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to

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have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however , that in no event shall any Agent Party have any liability to the Borrower, any Lender, any L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
(d)      Change of Address, Etc . Each of the Borrower, the Parent, the Administrative Agent, the L/C Issuers and the Swing Line Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower, the Parent, the Administrative Agent, the L/C Issuers and the Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.
(e)      Reliance by Administrative Agent, L/C Issuers and Lenders . The Administrative Agent, the L/C Issuers and the Lenders shall be entitled to rely and act upon any notices (including telephonic notices, Advance Notices, Letter of Credit Applications and Swing Line Loan Notices) that the Administrative Agent or such Lender reasonably believes has been given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, each L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice that the Administrative Agent, such Lender or such Related Party reasonably believes has been given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.
Section 8.03      No Waiver; Remedies . No failure on the part of any Lender, any L/C Issuer or the Administrative Agent to exercise, and no delay in exercising, any right, remedy, power or privilege hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.


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Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Article VI for the benefit of all the Lenders and the L/C Issuers; provided , however , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 8.05 (subject to the terms of Section 2.16 ), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any debtor relief law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Article VI and (ii) in addition to the matters set forth in clauses (b) , (c)  and (d)  of the preceding proviso and subject to Section 2.16 , any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
Section 8.04      Expenses; Indemnity; Damage Waiver .
(a)      Costs and Expenses . The Borrower shall pay (i) all reasonable out of pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated); (ii) all reasonable out of pocket expenses incurred by any L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out of pocket expenses incurred by the Administrative Agent, any Lender or any L/C Issuer (including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or any L/C Issuer), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section , or (B) in connection with the Advances made or the Notes or Letters of Credit issued hereunder, including all such out of pocket expenses incurred during any workout, restructuring or negotiations in respect of such Advances or Notes or Letters of Credit.
(b)      Indemnification by the Borrower . The Borrower agrees to indemnify and hold harmless the Administrative Agent (and each sub-agent thereof), each Lender and each L/C Issuer, each of their respective Affiliates, and each Related Party of any of the foregoing Persons (each, an “ Indemnified Party ”) from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees, charges, disbursements and expenses of counsel for any Indemnified Party) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of

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(including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) the Notes, this Agreement, any other Loan Document, any of the transactions contemplated herein or therein (including any refusal by any L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), the actual or proposed use of the proceeds of the Advances, or, in the case of the Administrative Agent (and any such sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents except to the extent such claim, damage, loss, liability or expense resulted from (i) such Indemnified Party’s gross negligence or willful misconduct, (ii) the material breach of such Indemnified Party’s obligations hereunder or under any other Loan Document, in the case of clauses (i) and (ii) as finally determined in a nonappealable judgment by a court of competent jurisdiction, or (iii) any claim, damage, loss, liability or expense to the extent resulting from the claim of any Indemnified Party solely against one or more other Indemnified Parties (and not by one or more Indemnified Parties against the Administrative Agent or any Arranger in such capacity) that has not resulted from the action, inaction, participation or contribution of the Borrower or any of its Subsidiaries or any of their respective affiliates, officers, directors, employees, agents, advisors or other representatives. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 8.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower or any other Loan Party, its respective directors, shareholders or creditors or an Indemnified Party or any other Person and regardless of whether any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. This Section 8.04(b) shall not apply with respect to Taxes other than any Taxes that represent claims, damages, losses, liabilities, expenses, etc. arising from any non-Tax claim.
(c)      Other Costs . If any payment of principal of, or Conversion of, any Eurocurrency Rate Advance is made (i) by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.09(d) , 2.11 or 2.13 , acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, or (ii) by an Eligible Assignee to a Lender other than on the last day of the Interest Period for such Advance upon an assignment of rights and obligations under this Agreement pursuant to Section 8.06 as a result of a demand by the Borrower pursuant to Section 8.11 , or (iii) as part of a re-allocation of the Commitments of the Lenders as a result of an increase in Commitments pursuant to Section 2.19 , then the Borrower shall, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance, less the return such Lender reasonably expects to receive on its redeployment of funds.
(d)      Reimbursement by Lenders . To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), any L/C Issuer or any Related Party thereof, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent),

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such L/C Issuer or such Related Party, as the case may be, such Lender’s Pro Rata Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought and without regard to the last sentence in the definition of Pro Rata Share Percentage) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or any L/C Issuer in its capacity as such, or against any Related Party thereof acting for the Administrative Agent (or any such sub-agent) or any L/C Issuer in connection with such capacity. The obligations of the Lenders under this subsection (d) are subject to the provisions of Section 2.02(e) .
(e)      Waiver of Consequential Damages, Etc . To the fullest extent permitted by applicable law and without in any way limiting the indemnification obligations set forth above, no party hereto shall assert, and each hereby waives, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Advance or Letter of Credit or the use of the proceeds thereof. No Indemnified Party referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby except as a result of such Indemnified Party’s gross negligence of willful misconduct.
(f)      Payments. All amounts due under this Section shall be payable not later than ten (10) Business Days after demand therefor.
(g)      Survival . Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section and Sections 2.12 and 2.15 herein shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Total Commitment and the repayment, satisfaction or discharge of all the other Obligations.
Section 8.05      Right of Set-off . Upon the occurrence and during the continuance of any Event of Default, each Lender, each L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender, such L/C Issuer or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender or such L/C Issuer or the Note held by such Lender, whether or not such Lender or such L/C Issuer shall have made any demand under this Agreement, any other Loan Document or such Note and although such obligations may be unmatured; provided , that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 8.16 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent

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and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. Each Lender agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender, each L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender, such L/C Issuer and their respective Affiliates may have.
Section 8.06      Successors and Assigns .
(a)      Successors and Assigns Generally . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent, each L/C Issuer and each Lender (except by operation of law or to the extent permitted hereunder) and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section , (ii) by way of participation in accordance with the provisions of subsection (d) of this Section , and (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuers and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b)      Assignments by Lenders . Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances (including for purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that any such assignment shall be subject to the following conditions:
(i)      Minimum Amounts . (A) In the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Advances and the L/C Advances at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; (B) and in any case not described in subsection b(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Advances outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Advances of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $10,000,000 and increments of $1,000,000 in excess thereof unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such

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consent not to be unreasonably withheld or delayed); provided, however , that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met;
(ii)      Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Advances and the L/C Advances or the Commitment assigned, except that this clause (ii) shall not apply to rights of the Swing Line Lender in respect of Swing Line Loans;
(iii)      Required Consents . No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and in addition:
(A)      the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;
(B)    the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund;
(C)    the consent of the L/C Issuers (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding); and
(D)    the consent of the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment.
(iv)      Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The Eligible Assignee, if it is not a Lender, shall deliver to the Administrative Agent an administrative questionnaire and the Administrative Agent shall further deliver such administrative questionnaire to the Borrower.
(v)      No Assignment to Certain Persons . No such assignment shall be made to (A) the Borrower, the Parent or any of the Borrower’s or Parent’s Affiliates or Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person

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which, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural person.
(vi)      Certain Additional Payments . In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment by such Lender shall be effective unless and until, in addition to the other conditions thereto set forth herein, the applicable assignor or assignee shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Advances and participations in Letters of Credit and Swing Line Loans in accordance with its Pro Rata Share. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
(vii)      Limitation of Borrower Liability . If a Lender changes its Applicable Lending Office and, as a result of circumstances existing at the date the change occurs, the Borrower, or any other Loan Party, would be obliged to make a payment to such Lender acting through its new Applicable Lending Office under Section 2.15 , then such Lender acting through its new Applicable Lending Office is only entitled to receive payment under such Section to the same extent as the Lender acting through its previous Applicable Lending Office, would have been if the change had not occurred.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section , from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement with respect to the interest assigned and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement in addition to any rights and obligations it may theretofore have as a Lender, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.12 , 2.15 , and 8.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided , that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such

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Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section .
(c)      Register . The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Advances and L/C Advances owing to each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. In addition, the Administrative Agent shall maintain on the Register the designation, and revocation of designation, of any Lender as a Defaulting Lender of which it has received notice. The Register shall be available for inspection by the Borrower and the Lenders at any reasonable time and from time to time upon reasonable prior notice.
(d)      Participations .
(i)      Any Lender may at any time, without the consent of, or notice to, the Borrower, the Administrative Agent, the L/C Issuers or the Swing Line Lender, sell participations to any Person (other than a natural person, investment vehicle or trust for, or owned and operated for the primary benefit of a natural person, a Defaulting Lender, the Parent, the Borrower or any of the Parent’s or the Borrower’s respective Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Advances (including such Lender’s participations L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the L/C Issuers, the Swing Line Lender and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 8.04(d) without regard to the existence of any participation.
(ii)      Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 8.01 that affects such Participant. Subject to subsection (e) of this Section , the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.12 , 2.15 and 8.04 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section . To the extent permitted by law, each Participant also shall

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be entitled to the benefits of Section 8.05 as though it were a Lender, provided such Participant agrees to be subject to Section 2.16 as though it were a Lender.
(iii)      Each Lender that sells a participation shall, acting solely for this purpose as a nonfiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant's interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(e)      Limitation upon Participant Rights . A Participant shall not be entitled to receive any greater payment under Section 2.12 or 2.15 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.15 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.15 as though it were a Lender.
(f)      Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note(s), if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(g)      Resignation as L/C Issuer or Swing Line Lender after Assignment . Notwithstanding anything to the contrary contained herein, if at any time Bank of America or Citibank assigns all of its Commitment and Advances pursuant to subsection (b) above, (i) Bank of America or Citibank, as applicable, may, upon 30 days’ notice to the Borrower and the Lenders, resign as an L/C Issuer and/or (ii) Bank of America may, upon 30 days’ notice to the Borrower and the Lenders, resign as Swing Line Lender. In the event of any such resignation, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however , that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America or Citibank as an L/C Issuer or Bank of America as Swing Line Lender, as the case may be. If Bank of America or Citibank resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of an L/C

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Issuer hereunder with respect to all Letters of Credit issued by it outstanding as of the effective date of its resignation as an L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Advances or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c) ). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Advances or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c) . Upon the appointment of a successor and acceptance of such appointment by the successor L/C Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America or Citibank to effectively assume the obligations of Bank of America or Citibank, as the case may be, with respect to such Letters of Credit.
Section 8.07      Treatment of Certain Information; Confidentiality . Each of the Administrative Agent, the L/C Issuers and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it or its Affiliates (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, in which case, such Person shall, to the extent reasonably practicable and not prohibited by law, inform the Borrower promptly in advance thereof, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section , to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.19(c) or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction or any credit insurance provider, in each case, relating to the Borrower and its obligations, (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or any other Subsidiary of the Parent or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) subject to an agreement containing provisions substantially the same as those of this Section, to third-party service providers of the Lenders in connection with the credit facilities provided hereunder, (i) with the consent of the Parent or the Borrower or (j) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section actually known to or caused by the disclosing party or (y) becomes available to the Administrative Agent, any Lender, any L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Parent or the Borrower.

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For purposes of this Section , “ Information ” means all information received from the Parent, the Borrower or any other Subsidiary of the Parent relating to the Parent, the Borrower or any such Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any L/C Issuer or any Lender on a nonconfidential basis prior to disclosure by the Parent, the Borrower or any such Subsidiary. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
Each of the Administrative Agent, the L/C Issuers and the Lenders acknowledges that (a) the Information may include material non-public information concerning the Parent, the Borrower or a Subsidiary of either thereof, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable law, including Federal and state securities laws with respect to Lenders subject to such laws and only to the extent such laws are applicable to such Lender.
Section 8.08      Governing Law . This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.
Section 8.09      Execution in Counterparts . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 8.10      Survival of Representations and Warranties . All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent, each L/C Issuer and each Lender, regardless of any investigation made by the Administrative Agent, any L/C Issuer or any Lender or on their behalf and notwithstanding that the Administrative Agent, any L/C Issuer or any Lender may have had notice or knowledge of any Default at the time of any Borrowing, any Advance or any L/C Credit Extension, and shall continue in full force and effect as long as any Advance or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit or L/C Obligation shall remain outstanding.
Section 8.11      Replacement of Lenders . (i) If any Lender requests compensation under Section 2.12 , (ii) if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15 , (iii) if any Lender is, or within fifteen (15) Business Days of such assignment or delegation was, a Defaulting Lender, (iv) if any Lender is unable to make Eurocurrency Rate Advances pursuant to Section 2.13 , (v) if any Lender is prohibited by applicable law from extending credit to a new jurisdiction of formation of the Borrower pursuant to Section 5.01(c)(iii) , or (vi) if any Lender

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shall fail to provide any consent, or consent to any waiver or amendment, agreed to by the Required Lenders then the Borrower may, at its sole expense and effort, upon written notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 8.06 ), all of its interests, rights (other than its existing rights to payments pursuant to Sections 2.12 and 2.15 ) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:
(a)      the Borrower shall have paid (or cause to be paid) to the Administrative Agent the assignment fee specified in Section 8.06(b) ;
(b)      such Lender shall have received payment of an amount equal to the outstanding principal of its Advances and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 8.04(c) ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(c)      in the case of any such assignment resulting from a claim for compensation under Section 2.12 or payments required to be made pursuant to Section 2.15 , such assignment will result in a reduction in such compensation or payments thereafter;
(d)      in the case of any such assignment resulting from a Lender’s being prohibited by applicable law from extending credit to a new jurisdiction of formation of the Borrower, such assignment will result in a Lender that can extend credit to the Borrower in such new jurisdiction;
(e)      such assignment does not conflict with applicable laws;
(f)      no Default or Event of Default shall have occurred and be continuing;
(g)      such parties to the assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption and the assignee shall deliver to the Administrative Agent an administrative questionnaire; and
(h)    in the case of an assignment resulting from the event described in clause (vi) above of this Section 8.11 , the applicable Eligible Assignee shall have consented to the applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
Section 8.12      Jurisdiction, Etc .
(a)      Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the State of New York sitting in New York County and the United States District Court of the Southern District of New

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York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the Notes, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the Parent and the Borrower hereby agrees that service of process in any such action or proceeding brought in any such New York State court or in such federal court may be made upon the Parent and the Borrower c/o Invesco Group Services, Inc. at its offices at 1555 Peachtree Street N.E., Atlanta, Georgia 30309, Attention: General Counsel (the “ Process Agent ”), and hereby further agrees that the failure of the Process Agent to give any notice of any such service to the Parent or the Borrower, as applicable, shall not impair or affect the validity of such service or of any judgment rendered in any action or proceeding based thereon. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or the Notes in the courts of any jurisdiction.
(b)      Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(c)      To the extent that either the Parent or the Borrower has or hereafter may acquire any immunity from the 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, each of the Parent and the Borrower hereby irrevocably waives such immunity in respect of its obligations under this Agreement and the other Loan Documents.
Section 8.13      Judgment .
(a)      Rate of Exchange . If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum due hereunder or under the Notes in another currency into Dollars, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which, in accordance with normal banking procedures, the Administrative Agent could purchase such other currency with Dollars in New York City, New York, at the close of business on the Business Day immediately preceding the day on which final judgment is given, together with any premiums and costs of exchange payable in connection with such purchase.
(b)      Indemnity . The obligation of the Borrower in respect of any sum due from it to the Administrative Agent or any Lender hereunder or under any Note shall, notwithstanding any judgment in a currency other than Dollars, be discharged only to the extent that on the Business Day next succeeding receipt by the Administrative Agent or such Lender of any sum adjudged to be so due in such other currency, the Administrative Agent or such Lender, as the case may be,

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may, in accordance with normal banking procedures, purchase Dollars with such other currency. If the Dollars so purchased are less than the sum originally due to the Administrative Agent or such Lender in Dollars, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender against such loss, and if the Dollars so purchased exceed the sum originally due to any the Administrative Agent or any Lender in Dollars, the Administrative Agent or such Lender agrees to remit to the Borrower such excess.
Section 8.14      Waiver of Jury Trial . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION .
Section 8.15      USA PATRIOT Act Notice . Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower and the Parent that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Act ”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act. The Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.
Section 8.16      Defaulting Lenders .
(a)      Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender as provided in Section 8.16(b) , to the extent permitted by applicable law:
(i)      Waivers and Amendments . That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 8.01 and in the definition of “Required Lenders”.


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(ii)      Reallocation of Payments . Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VI or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 8.05 ), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second , to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to the L/C Issuers or Swing Line Lender hereunder; third , to Cash Collateralize the L/C Issuers’ Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.18 ; fourth , as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Advance or L/C Advance in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth , if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Advances under this Agreement; sixth , to the payment of any amounts owing to the Lenders, the L/C Issuers or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, any L/C Issuer or Swing Line Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and eighth , to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Advances or L/C Borrowings in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Advances or L/C Borrowings were made at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Advances of, and L/C Borrowings owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Advances of, or L/C Borrowings owed to, that Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 8.16(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
(iii)      Certain Fees .
(A)      No Defaulting Lender shall be entitled to receive any Commitment Fee payable under Section 2.05(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).
(B)      Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the


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extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.18 .
(C)      With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Borrower shall (x) pay to each non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations or Swing Line Loans that has been reallocated to such non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the applicable L/C Issuer and Swing Line Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s or Swing Line Lender’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.
(iv)      Reallocation of Pro Rata Share Percentages to Reduce Fronting Exposure . During any period in which there is a Defaulting Lender, for purposes of computing the amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit or Swing Line Loans pursuant to Sections 2.03 and 2.04 , the “Pro Rata Share Percentage” of each non-Defaulting Lender shall be computed without giving effect to the Commitment of that Defaulting Lender; provided, that, (i) each such reallocation shall be given effect only if, at the date the applicable Lender becomes a Defaulting Lender, no Default or Event of Default exists; and (ii) the aggregate obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit and Swing Line Loans shall not exceed the positive difference, if any, of (1) the Commitment of that non-Defaulting Lender minus (2) the aggregate Outstanding Amount of the Advances and L/C Advances of that Lender. Subject to Section 8.21 , no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.
(v)      Cash Collateral, Repayment of Swing Line Loans . If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under applicable law, (x) first, prepay Swing Line Loans in an amount equal to the Swing Line Lenders’ Fronting Exposure and (y) second, Cash Collateralize the applicable L/C Issuer’s Fronting Exposure in accordance with the procedures set forth in Section 2.18 .
(b)      Defaulting Lender Cure . If the Borrower, the Administrative Agent, Swing Line Lender and the L/C Issuers agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Advances of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Advances and funded and unfunded participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders in

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accordance with their Pro Rata Share Percentage (without giving effect to Section 8.16(a)(iv)) , whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
The Administrative Agent, any L/C Issuer or the Swing Line Lender will promptly notify the Borrower at the time the Administrative Agent, any L/C Issuer or the Swing Line Lender determines or is otherwise informed of the existence of a Defaulting Lender.
Section 8.17      No Advisory or Fiduciary Relationship . In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Lenders and the Arrangers are arm’s-length commercial transactions between the Parent, the Borrower and their respective Affiliates, on the one hand, and the Administrative Agent, the Lenders and the Arrangers, on the other hand, (B) each of the Parent and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each of the Parent and the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Administrative Agent, the Lenders and each Arranger is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for any of the Loan Parties or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent nor any Lender or Arranger has any obligation to any of the Loan Parties or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, each Lender and each Arranger and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Loan Parties and their respective Affiliates, and neither the Administrative Agent nor any Lender or Arranger has any obligation to disclose any of such interests to any of the Loan Parties or any of their respective Affiliates. To the fullest extent permitted by law, each Loan Party hereby waives and releases any claims that it may have against the Administrative Agent or any Lender or any Arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
Section 8.18      Interest Rate Limitation . Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “ Maximum Rate ”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Advances or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by

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applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
Section 8.19      Severability . If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 8.19 , if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by the bankruptcy code of the United States or any comparable bankruptcy, insolvency, receivership, reorganization or other debtor relief laws, as determined in good faith by the Administrative Agent, any L/C Issuer or the Swing Line Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.
Section 8.20      Electronic Execution of Assignments and Certain Other Documents . The words “execute,” “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation Assignment and Assumptions, amendments or other modifications, Advance Notices, Swing Line Loan Notices, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.
Section 8.21      Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender that is an EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:



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(a)      the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an EEA Financial Institution; and
(b)      the effects of any Bail-In Action on any such liability, including, if applicable:
(i)      a reduction in full or in part or cancellation of any such liability;
(ii)      a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii)      the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
[Signature Pages Follow]


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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers or other representatives thereunto duly authorized, as of the date first above written.
BORROWER :
INVESCO FINANCE PLC

By: /s/ Loren M. Starr    
Name: Loren M. Starr        
Title: Director        


PARENT :
INVESCO LTD.

By: /s/ Loren M. Starr        
Name: Loren M. Starr        
Title: Senior Managing Director & Chief Financial Officer        




Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
91839933


ADMINISTRATIVE AGENT :
BANK OF AMERICA, N.A. , as Administrative
Agent
By: /s/ Angela Larkin        
Name: Angela Larkin        
Title: Assistant Vice President        



Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


LENDERS:
BANK OF AMERICA, N.A. , as a Lender, L/C Issuer and Swing Line Lender
By: /s/ Ankit Mehta        
Name: Ankit Mehta        
Title: Associate        



Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


CITIBANK N.A. , as a Lender and L/C Issuer
By: /s/ Maureen Maroney        
Name: Maureen Maroney        
Title: Vice President        

Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. , as a Lender
By: /s/ Suzanne Ley        
Name: Suzanne Ley        
Title: Director        

Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH , as a Lender
By: /s/ Dominic Sorresso        
Name: /s/ Dominic Sorresso        
Title: Authorized Signatory        


By: /s/ Melissa Brown        
Name: Melissa Brown        
Title: Authorized Signatory        

Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


GOLDMAN SACHS BANK, USA , as a Lender
By: /s/ Ryan Durkin        
Name: Ryan Durkin        
Title: Authorized Signatory        

Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


HSBC BANK USA, NATIONAL ASSOCIATION , as a Lender
By: /s/ Michael C. Flynn        
Name: Michael C. Flynn        
Title: Senior Vice President        


Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


JPMORGAN CHASE BANK, N.A. , as a Lender
By: /s/ Kenise Henry Larmond        
Name: Kenise Henry Larmond        
Title: Vice President        

Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


MORGAN STANLEY BANK, N.A. , as a Lender
By: /s/ Michael King        
Name: Michael King        
Title: Authorized Signatory        

Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


THE BANK OF NEW YORK MELLON , as a Lender
By: /s/ Kenneth P. Sneider, Jr.        
Name: Kenneth P. Sneider, Jr.        
Title: Managing Director        

Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


THE TORONTO-DOMINION BANK, NEW YORK BRANCH , as a Lender
By: /s/ Robert C. Franciscus        
Name: Robert C. Franciscus        
Title: Authorized Signatory        

Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


WELLS FARGO BANK, NATIONAL ASSOCIATION , as a Lender
By: /s/ William R. Goley        
Name: /s/ William R. Goley        
Title: Managing Director        

Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


BARCLAYS BANK PLC , as a Lender
By: /s/ Michael Orphanides        
Name: Michael Orphanides        
Title: Managing Director        

Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH , as a Lender
By: /s/ Doreen Barr        
Name: Doreen Barr        
Title: Authorized Signatory        

By: /s/ Lea Baerlocher        
Name: Lea Baerlocher        
Title: Authorized Signatory        



Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED, NEW YORK BRANCH , as a Lender
By: /s/ Guoshen Sun        
Name: Guoshen Sun        
Title: Deputy General Manager        

Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


STATE STREET BANK AND TRUST COMPANY , as a Lender
By: /s/ Kimberly R. Costa        
Name: Kimberly R. Costa        
Title: Vice President        



Invesco Finance PLC
Fourth Amended and Restated Credit Agreement
Signature Page
LEGAL02/37435249v5


SCHEDULE I
LIST OF APPLICABLE LENDING OFFICES
Name of Initial Lender
Domestic Lending Office
Eurocurrency Lending Office
Bank of America, N.A.
See Schedule 8.02
Citibank, N.A.
1615 Brett Road, Building III New Castle, Delaware 19720
Attention: Vinoliya Bhasker
Telephone: 201-751-7571
Facsimile: 646-274-5000
1615 Brett Road, Building III
New Castle, Delaware 19720
Attention: Vinoliya Bhasker
Telephone: 201-751-7571
Facsimile: 646-274-5000
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
1251 Avenue of the Americas
New York, New York 10020-1104
Attention: Suzanne Ley
Telephone: 212-782-4468
Facsimile: 646-565-9242
1251 Avenue of the Americas New York, New York 10020-1104
Attention: Suzanne Ley
Telephone: 212-782-4468
Facsimile: 646-565-9242
Canadian Imperial Bank of Commerce, New York Branch
161 Bay Street, 8thFloor Toronto, ON M5J 2S8, Canada
Attention: Matthew Reis, Director
Telephone: 416-594-8392
Facsimile: 416-956-3810
595 Bay Street, 5 th  Floor
Toronto, ON M5G 2C2
CIBC-CPS-US, Credit Monitoring
Attention: Angela Tom
Telephone: 416-542-4446
Facsimile: 905-948-1934
161 Bay Street, 8thFloor Toronto, ON M5J 2S8, Canada
Attention: Matthew Reis, Director
Telephone: 416-594-8392
Facsimile: 416-956-3810
595 Bay Street, 5 th  Floor
Toronto, ON M5G 2C2
CIBC-CPS-US, Credit Monitoring
Attention: Angela Tom
Telephone: 416-542-4446
Facsimile: 905-948-1934
Goldman Sacs Bank USA
30 Hudson Street, 4th Floor Jersey City, New Jersey 07302
Attention: Thierry C. Le Jouan
Telephone: 212-934-3921 gsd.link@gs.com
30 Hudson Street, 4th Floor Jersey City, New Jersey 07302
Attention: Thierry C. Le Jouan
Telephone: 212-934-3921 gsd.link@gs.com
HSBC Bank USA, National Association
452 Fifth Avenue
New York, New York 10018
Attention: Myriam Ferguson
Telephone: 212-525-1529
Facsimile: 847-793-3415
452 Fifth Avenue
New York, New York 10018
Attention: Myriam Ferguson
Telephone: 212-525-1529
Facsimile: 847-793-3415
JPMorgan Chase Bank, N.A.
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Deepak Krishna
Telephone: 91-80 67905013
Ext.35013
Facsimile: 201-244-3885
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Deepak Krishna
Telephone: 91-80 67905013
Ext.35013
Facsimile: 201-244-3885

Schedule I



Name of Initial Lender
Domestic Lending Office
Eurocurrency Lending Office
Morgan Stanley Bank, N.A.
Morgan Stanley Loan Servicing 1300 Thames Street Wharf, 4 th  Floor Baltimore, Maryland 21231
Telephone: 443-627-4355
Facsimile: 718-233-2140 msloanservicing@morganstanley.com
Morgan Stanley Loan Servicing 1300 Thames Street Wharf, 4 th  Floor Baltimore, Maryland 21231
Telephone: 443-627-4355
Facsimile: 718-233-2140
msloanservicing@morganstanley.com
The Bank of New York Mellon
225 Liberty Street, 17 th  Floor
New York, New York 10286
Attention: Kenneth P. Sneider, Jr.
Telephone: 212-635-6863
Facsimile: 212-635-4717
225 Liberty Street, 17 th  Floor
New York, New York 10286
Attention: Kenneth P. Sneider, Jr.
Telephone: 212-635-6863
Facsimile: 212-635-4717
The Toronto-Dominion Bank, New York Branch
222 Bay Street, 15 th  Floor
Toronto, Ontario, M5K 1A2
Attention: Christopher Wong
Telephone: 416-983-8879
Facsimile: 416-982-8619
222 Bay Street, 15 th  Floor
Toronto, Ontario, M5K 1A2
Attention: Christopher Wong
Telephone: 416-983-8879
Facsimile: 416-982-8619
Wells Fargo Bank, National Association
90 South 7 th  Street, MAC N9305-075 Minneapolis, Minnesota 55402
Attention: Thomas Doddridge
Telephone: 312-781-0722
Facsimile: 312-845-8606
90 South 7 th  Street, MAC N9305-075 Minneapolis, Minnesota 55402
Attention: Thomas Doddridge
Telephone: 312-781-0722
Facsimile: 312-845-8606
Barclays Bank PLC
Barclays Loan Operations
10, South Colonnade
London, E14 4PU
Telephone: 44 (0) 20 3134 0516 emeaparticipationloans@barclays.com
Barclays Loan Operations
10, South Colonnade
London, E14 4PU
Telephone: 44 (0) 20 3134 0516 emeaparticipationloans@barclays.com
Credit Suisse AG, Cayman Islands Branch
Eleven Madison Avenue
New York, New York 10010
Telephone: 919-994-6481
Facsimile: 866-469-3871 18664693871@docs.ldsprod.com
Eleven Madison Avenue
New York, New York 10010
Telephone: 919-994-6481
Facsimile: 866-469-3871 18664693871@docs.ldsprod.com
Industrial and Commercial Bank of China Limited, New York Branch
725 Fifth Avenue, 20 th  Floor
New York, New York 10022
Attention: Sam Chen
Telephone: 212-238-8297
Facsimile: 212-956-3631
725 Fifth Avenue, 20 th  Floor
New York, New York 10022
Attention: Sam Chen
Telephone: 212-238-8297
Facsimile: 212-956-3631
State Street Bank and Trust Company
Fund Finance Division
One Iron Street, M/S CCB0901
Boston, Massachusetts 02210
Attention: Peter Connolly
Telephone: 617-662-8588
Facsimile: 617-988-6677
Fund Finance Division
One Iron Street, M/S CCB0901
Boston, Massachusetts 02210
Attention: Peter Connolly
Telephone: 617-662-8588
Facsimile: 617-988-6677

Schedule I




SCHEDULE 1.01
COMMITMENTS
Lender
Commitment
Applicable
Percentage
Bank of America, N.A.
$125,000,000.00
8.333333333
%
Citibank, N.A.
$125,000,000.00
8.333333333
%
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
$106,000,000.00
7.066666667
%
Canadian Imperial Bank of Commerce, New York Branch
$106,000,000.00
7.066666667
%
Goldman Sachs Bank USA
$106,000,000.00
7.066666667
%
HSBC Bank USA, National Association
$106,000,000.00
7.066666667
%
JPMorgan Chase Bank, N.A.
$106,000,000.00
7.066666667
%
Morgan Stanley Bank, N.A.
$106,000,000.00
7.066666667
%
The Bank of New York Mellon
$106,000,000.00
7.066666667
%
The Toronto-Dominion Bank, New York Branch
$106,000,000.00
7.066666667
%
Wells Fargo Bank, National Association
$106,000,000.00
7.066666667
%
Barclays Bank PLC
$74,000,000.00
4.933333333
%
Credit Suisse AG, Cayman Islands Branch
$74,000,000.00
4.933333333
%
Industrial and Commercial Bank of China Limited, New
$74,000,000.00
4.933333333
%
York Branch
 
 
State Street Bank and Trust Company
$74,000,000.00
4.933333333
%
Total
$1,500,000,000.00
100.000000000
%





91839933_4


SCHEDULE 4.01(b)

SUBSIDIARIES

Company Name
Jurisdiction of Incorporation/Organization
Atlantic Wealth Holdings Limited
Oxfordshire
Atlantic Wealth Management Limited
Oxfordshire
Beijing HIW Ruichi Investment Management Center
China
Beijing HIW XinHE Investment Co., Ltd.
China
CM Investment Nominees Limited
Oxfordshire
Coff Associates (Cayman) Limited
Cayman Islands
Elliot Associates Limited
Oxfordshire
Finemost Limited
Oxfordshire
Gatefold Hayes GP Limited
Oxfordshire
Greenspruce GP Limited
Oxfordshire
HIW China Opportunity Fund SPC
Cayman Islands
HIW Private Equity Investment Management Limited
Hong Kong
Huaneng Invesco WLR (Beijing) Investment Fund
Management Company Ltd

China
HVH Immobilien und Beteiligungs GmbH
Germany
HVH USA, Inc.
Delaware
Hyderabad IT Support Services Private Limited
India
India Asset Recovery Management Limited
Mauritius
INVESCO (B.V.I.) NOMINEES LIMITED
Virgin Islands, British
Invesco Administration Services Limited
Oxfordshire
Invesco Advisers, Inc.
Delaware
Invesco Asia Pacific Real Estate Investment Management Consulting (Shenzhen Limited)
China
Invesco Asset Management (Bermuda) Ltd.
Bermuda
Invesco Asset Management (Japan) Limited
Japan
Invesco Asset Management (Switzerland) Limited
Switzerland
Invesco Asset Management Asia Limited
Hong Kong
Invesco Asset Management Australia (Holdings) Ltd
Victoria
Invesco Asset Management Deutschland GmbH
Germany
Invesco Asset Management (India) Private Ltd
India
INVESCO Asset Management Ireland Holdings Limited
Ireland
Invesco Asset Management Limited
Oxfordshire
Invesco Asset Management Pacific Limited
Hong Kong
Invesco Asset Management SA
France
Invesco Asset Management Singapore Ltd
Singapore
Invesco Asset Management Österreich GmbH
Austria
Invesco Australia Limited
Victoria
Invesco Canada Holdings Inc.
Ontario

Schedule 4.01 (b)


Company Name
Jurisdiction of Incorporation/Organization
Invesco Canada Ltd.
Ontario
Invesco Capital Markets, Inc.
Delaware
Invesco (Cayman Islands) Ltd.
Cayman Islands
Invesco Continental Europe Holdings SA
Luxembourg
Invesco Distributors, Inc.
Delaware
Invesco Far East Limited
Oxfordshire
Invesco Finance Inc.
Delaware
Invesco Finance PLC
Oxfordshire
Invesco Financial Services Ltd.
Canada
Invesco Fund Managers Limited
Oxfordshire
INVESCO Funds Group, Inc.
Delaware
Invesco Gemini Associates LLC
Delaware
Invesco Global Asset Management DAC
Ireland
Invesco Global Asset Management (Bermuda) Limited
Bermuda
Invesco Global Direct Real Estate Feeder GP Ltd
Ontario
Invesco Global Direct Real Estate GP Ltd
Ontario
Invesco Global Investment Funds Limited
Oxfordshire
Invesco Global Real Estate Asia Pacific Inc.
Delaware
Invesco Group Limited
Oxfordshire
Invesco Group Services, Inc.
Delaware
Invesco GT Asset Management Limited
Oxfordshire
Invesco Holding Company Limited
Oxfordshire
Invesco Holding Company (US) Inc.
Delaware
INVESCO Holland B.V.
Netherlands
Invesco Hong Kong Limited
Hong Kong
Invesco (Hyderabad) Private Limited
India
Invesco Inc.
Nova Scotia
Invesco Indexing LLC
Delaware
Invesco Insurance Agency, Inc.
Delaware
INVESCO International (Southern Africa) Limited
South Africa
Invesco International Holdings Limited
Oxfordshire
INVESCO International Limited
Great Britain
Invesco Investment Advisers LLC
Delaware
Invesco Investments (Bermuda) Limited
Bermuda
Invesco Investment Consulting (Beijing) Limited
China
Invesco Investment Management (Shanghai) Limited
China
Invesco Investment Services, Inc.
Delaware
Invesco Italia SGR SPA
Italy
Invesco Korean Real Estate Holdings LLC
Delaware
Invesco Management GmbH
Germany
Invesco Management Group, Inc.
Delaware
INVESCO Management S.A.
Luxembourg

Schedule 4.01 (b)


Company Name
Jurisdiction of Incorporation/Organization
Invesco North American Group Limited
Oxfordshire
Invesco North American Holdings, Inc.
Delaware
Invesco Pacific Group Limited
Oxfordshire
Invesco Pacific Partner Ltd
Bermuda
Invesco Perpetual Life Limited
Oxfordshire
INVESCO Polska Sp.z.o.o.
Poland
Invesco PowerShares Capital Management LLC
Ireland
Invesco Private Capital, Inc.
Delaware
Invesco Real Estate Advisors (Shanghai) Limited
Shanghai
Invesco Real Estate Investment (Asia) LLC
Delaware
Invesco Real Estate Investment Asia Pacific Limited
Hong Kong
Invesco Real Estate Korea
Republic of Korea
Invesco Real Estate Limited
United Kingdom
Invesco Real Estate Management S.a.r.l.
Luxembourg
INVESCO Real Estate s.r.o.
Czech Republic
Invesco Real Estate UK Residential S.a.r.l.
Luxembourg
Invesco Real Estate Value Add S.a.r.l.
Luxembourg
Invesco Realty Inc.
Delaware
Invesco Savings Scheme (Nominees) Limited
Oxfordshire
Invesco Senior Secured Management, Inc.
Delaware
Invesco Taiwan Limited
Taiwan
Invesco Trust Company
Texas
Invesco Trustee Private Limited
India
Invesco UK Holdings Limited
Oxfordshire
Invesco UK Limited
Oxfordshire
Invesco WLR Limited
Hong Kong
IRE Advisors (Shanghai) Ltd.
Shanghai
IRE (China) Limited
China
IRE (Cayman) Limited
Cayman Island
IVZ Bahamas Private Limited
Lyford Cay, Nassau
IVZ Distributors, Inc.
Delaware
IVZ Finance Limited
Ireland
IVZ Finance S.a.r.l.
Luxembourg
IVZ Immobilien Verwaltungs GmbH
Germany
IVZ UK Limited
Oxfordshire
IVZ Mauritius Services Private Limited
Port Louis
James Bryant Limited
Oxfordshire
Jemstep, Inc.
Delaware
PCM Properties LLC
Illinois
Perpetual Administration Limited
Oxfordshire
Perpetual Limited
Oxfordshire
Perpetual Portfolio Management Limited
Oxfordshire

Schedule 4.01 (b)


Company Name
Jurisdiction of Incorporation/Organization
Perpetual Unit Trust Management (Nominees) Limited
Oxfordshire
Sermon Lane Nominees Limited
Oxfordshire
Tower Asia Pac HoldCo. LLC
Delaware
Trimark Investments Ltd.
Canada
VV Immobilien Verwaltungs GmbH
Germany
VV Immobilien Verwaltungs und Beteiligungs GmbH
Germany
Wessex Winchester GP Limited
Oxfordshire
W.L. Ross & Co. (India) LLC
Delaware
W.L. Ross M & T, LLC
Delaware
W.L. Ross & Co., LLC
Delaware










Schedule 4.01 (b)


SCHEDULE 4.01(d)

REQUIRED AUTHORIZATIONS

None.

Schedule 4.01 (d)


SCHEDULE 4.01(i)
DISCLOSED LITIGATION


None.


Schedule 4.01 (i)


SCHEDULE 5.02(a)



EXISTING LIENS

None.






Schedule 5.02 (a)


SCHEDULE 8.02
ADMINISTRATIVE AGENT’S OFFICE;
CERTAIN ADDRESSES FOR NOTICES
BORROWER:
Invesco Finance PLC
1555 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Suzanne Christensen
Telephone: 404-439-3442
Telecopier: 404-962-8247
E-Mail:    suzanne.christensen@invesco.com
Website Address: Invesco.com
PARENT:
Invesco Ltd.
1555 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Suzanne Christensen
Telephone: 404-439-3442
Telecopier: 404-962-8247
E-Mail:    suzanne.christensen@invesco.com
Website Address: Invesco.com
ADMINISTRATIVE AGENT:
Administrative Agent’s Office (For payments and Requests for Credit Extensions):
Bank of America, N.A.
One Independence Center
101 North Tryon Street
Mail Code: NC1-001-05-46
Charlotte, North Carolina 28255-0001
Attention: Charles Hensley
Telephone: 980-388-3225
Telecopier: 704-719-5362
E-Mail:    charles.hensley@baml.com










Schedule 8.02


Wiring Information:
Bank of America, N.A.
New York, New York
ABA Number: 026009593
Account Number: 1366072250600
Account Name: Wire Clearing Acct for Syn Loans - LIQ
Reference:    INVESCO FINANCE PLC
Other Notices as Administrative Agent:
Bank of America, N.A.
Agency Management
135 S LaSalle Street
Mail Code: IL4-135-09-61
Chicago, IL 60603
Attention: Angela Larkin
Telephone: 312-828-3882
Telecopier: 877-206-8409
E-Mail:    angela.larkin@baml.com
SWING LINE LENDER:
Bank of America, N.A.
One Independence Center
101 North Tryon Street
Mail Code: NC1-001-05-46
Charlotte, North Carolina 28255-0001
Attention: Charles Hensley
Telephone: 980-388-3225
Telecopier: 704-719-5362
E-Mail:    charles.hensley@baml.com
Wiring Information:
Bank of America, N.A.
New York, New York
ABA Number: 026009593
Account Number: 1366072250600
Account Name: Wire Clearing Acct for Syn Loans - LIQ
Reference:    INVESCO FINANCE PLC








Schedule 8.02


LC ISSUER’S OFFICE:
New LC requests and amendments:
Bank of America, N.A.
Trade Operations
1 Fleet Way
Mail Code: PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Charles Herron
Telephone: 570-496-9564
Telecopier: 800-755-8743
E-Mail:    charles.p.herron@baml.com


Schedule 8.02


EXHIBIT A

FORM OF NOTE
U.S. $____________________    Dated: [______________], 2017

FOR VALUE RECEIVED, the undersigned , INVESCO FINANCE PLC , a public limited company organized under the laws of England and Wales (the “ Borrower ”), HEREBY PROMISES TO PAY to the order of ___________________________ (the “ Lender ”) for the account of its Applicable Lending Office on the Termination Date the unpaid principal sum of U.S. $[ amount of the Lender’s Commitment in figures ] or, if less, the aggregate principal amount of all Advances made by the Lender to the Borrower pursuant to the Fourth Amended and Restated Credit Agreement dated as of August 11, 2017 among the Borrower, INVESCO LTD., the Lender, certain other lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent for the Lender and such other lenders and as Swing Line Lender and an L/C Issuer (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) outstanding on the Termination Date. Capitalized terms used but not defined herein shall have the meanings specified therefor in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of each Advance from the date of such Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement.
Both principal and interest in respect of each Advance are payable to the Administrative Agent for the account of the Lender in same day funds at the Administrative Agent’s Office. Each Advance owing to the Lender by the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note.
This Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, (i) provides for the making of Advances by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the Dollar amount first above mentioned or the Equivalent thereof in Sterling, the indebtedness of the Borrower resulting from each such Advance being evidenced by this Note, (ii) contains provisions for determining the Dollar Equivalent of Advances denominated in Sterling and (iii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified.

[Remainder of page left blank intentionally; signature page follows.]





A-1
Form of Notice
92155415


THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

INVESCO FINANCE PLC

By:     
Name:     
Title:     


A-2
Form of Note
92155415



ADVANCES AND PAYMENTS OF PRINCIPAL

Date
Amount of Advance
Amount of Principal Paid or Prepaid
Unpaid Principal Balance
Notation Made By
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


A-3
Form of Note
92155415


EXHIBIT B-1

FORM OF ADVANCE NOTICE
Date: ___________, 201__
Bank of America, N.A.
One Independence Center
101 North Tryon Street   
Mail Code: NC1-001-05-46
Charlotte, North Carolina 28255-0001 
Attention:     Charles Hensley

Ladies and Gentlemen:
Reference is made to that certain Fourth Amended and Restated Credit Agreement dated as of August 11, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among INVESCO FINANCE PLC, a public limited company organized under the laws of England and Wales (the “ Borrower ”), INVESCO LTD., the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer. Capitalized terms used but not defined herein shall have the meanings specified therefor in the Credit Agreement.
The undersigned hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the Borrower hereby requests a Borrowing under the Credit Agreement, and in connection therewith sets forth below the information relating to such Borrowing (the “ Proposed Borrowing ”) as required by Section 2.02(a) of the Credit Agreement:
(i)
The Business Day of the Proposed Borrowing is _______________, 20__.
(ii)
The Type of Advances comprising the Proposed Borrowing is [Base Rate Advances] [Eurocurrency Rate Advances].
(iii)
The aggregate amount of the Proposed Borrowing is [$_______________] [£_______________].
[(iv)
The initial Interest Period for each Eurocurrency Rate Advance made as part of the Proposed Borrowing is _______________ month[s].]
The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:
(A)    the representations and warranties contained in Section 4.01 (other than clauses (g) and (i)(i) of Section 4.01 ) of the Credit Agreement are correct in all material respects, before and after giving effect to the Proposed Borrowing and to the application


B-1-1
Form of Advance Notice
92155415


of the proceeds therefrom, as though made on and as of such date except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been correct in all material respects on and as of such earlier date (other than in the case of the representations and warranties made in Section 4.01(d) , which shall be correct in all material respects on and as of the date of the Proposed Borrowing as though made on and as of such date, without regard to any earlier date referenced therein); and
(B)    no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default.
Very truly yours,
INVESCO FINANCE PLC

By:     
Name:     
Title:     





B-1-2
Form of Advance Notice
92155415


EXHIBIT B-2

FORM OF SWING LINE LOAN NOTICE
Date: ___________, 201__

To:    Bank of America, N.A., as Swing Line Lender
Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Fourth Amended and Restated Credit Agreement dated as of August 11, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among INVESCO FINANCE PLC, a public limited company organized under the laws of England and Wales (the “ Borrower ”), INVESCO LTD., the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer. Capitalized terms used but not defined herein shall have the meanings specified therefor in the Credit Agreement.
The undersigned hereby requests a Swing Line Loan:
1.    On _________________________ (a Business Day).
2.    In the amount of $_______________.
The Swing Line Borrowing requested herein complies with the requirements of the provisos to the first sentence of Section 2.04(a) of the Credit Agreement.
Very truly yours,
INVESCO FINANCE PLC

By:     
Name:     
Title:     





B-2-1
Form of Swing Line Loan Notice
92155415


EXHIBIT C
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between [the][each] Assignor identified in item 1 below ( [the][each, an] “ Assignor ”) and [the][each] Assignee identified in item 2 below ( [the][each, an] “ Assignee ”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees] hereunder are several and not joint.] Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees] , and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors] , subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto in the amount [s] and equal to the percentage interest [s] identified below of all the outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including, without limitation, the Letters of Credit and the Swing Line Loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “ Assigned Interest ”). Each such sale and

________________________

1 For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.
2 For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.
3 Select as appropriate.
4 Include bracketed language if there are either multiple Assignors or multiple Assignees.


C-1
Form of Assignment and Assumption
92155415


assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

1.     Assignor [s] :    ______________________________
______________________________
[Assignor [is][is not] a Defaulting Lender]

2.
Assignee [s] :    ______________________________
______________________________
[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]

3.
Borrower :        INVESCO FINANCE PLC

4.
Administrative Agent :    BANK OF AMERICA, N.A., as the administrative agent under the Credit Agreement

5.
Credit Agreement :    Fourth Amended and Restated Credit Agreement dated as of August 11, 2017 among INVESCO FINANCE PLC, a public limited company organized under the laws of England and Wales (the “ Borrower ”), INVESCO LTD., the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, as amended, restated, supplemented or otherwise modified from time to time.
6.
Assigned Interest :
Assignor[s]
Assignee[s]
Aggregate Amount of Commitment for all Lenders
Amount of Commitment Assigned
Percentage
Assigned of Commitment
CUSIP Number
 
 
$__________
$__________
________%
 
 
 
$__________
$__________
 
 
 
 
$__________
$__________
________%
 

[7.
Trade Date :    __________________]
Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
___________________
5 List each Assignor, as appropriate.
6 List each Assignee, as appropriate.
7 Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
8 Set forth, to at least 9 decimals, as a percentage of the Commitment of all Lenders thereunder.
9 To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.


C-2
Form of Assignment and Assumption
92155415


The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:     
Name:
Title:

ASSIGNEE
[NAME OF ASSIGNEE]
By:     
Name:
Title:


C-3
Form of Assignment and Assumption
92155415


Consented to and Accepted:
BANK OF AMERICA, N.A. as
Swing Line Lender [and an L/C Issuer] 10  

By: _________________________________
Name:
Title:


[Consented to and Accepted:] 11  
CITIBANK N.A. as
an L/C Issuer

By: _________________________________
Name:
Title:

[Consented to and] 12 Accepted:
BANK OF AMERICA, N.A., as
Administrative Agent
By: _________________________________
Name:
Title:

[Consented to:] 13  
INVESCO FINANCE PLC

By: _________________________________
Name:
Title:


________________________

10 To be added only if the consent of Bank of America as an L/C Issuer is required by the terms of the Credit Agreement.
11 To be added only if the consent of Citibank as an L/C Issuer is required by the terms of the Credit Agreement.
12 To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.
13 To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.



C-4
Form of Assignment and Assumption
92155415


ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1.    Representations and Warranties.
1.1.     Assignor . [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2.     Assignee . [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 8.06(b)(iii) , (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 8.06(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.01(h) or Section 3.01(d) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent, [the][any] Assignor or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a foreign lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the


C-5
Form of Assignment and Assumption
92155415


Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
    
[The][Each] Assignee (x) represents and warrants, as of the Effective Date, to, and (y) covenants, from the Effective Date to the date such Person ceases being a Lender party to the Credit Agreement, for the benefit of, the Administrative Agent, [the][any] Assignor and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:

(iv)      [the][each] Assignee is not using “plan assets” of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments,
(v)      the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Assignee’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments, the Loan Documents and this Assignment and Assumption,
(vi)      (A) such Assignee is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and the Credit Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and the Credit Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Assignee, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Assignee’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments, the Loan Documents and this Assignment and Assumption, or
(vii)      such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
In addition, unless sub-clause (i) in the immediately preceding paragraph is true with respect to a [the][each] Assignee or such Assignee has not provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding paragraph, such Assignee further (x) represents and warrants, as of the Effective Date, to, and (y) covenants, from the Effective Date to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, [the][any] Assignor and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that:


C-6
Form of Assignment and Assumption
92155415


(i)      none of the Administrative Agent, any Arranger, [the][any] Assignor, or any of their respective Affiliates is a fiduciary with respect to the assets of such Assignee (including in connection with the reservation or exercise of any rights by the Administrative Agent under the Credit Agreement, any Loan Document or any documents related to hereto or thereto),
(ii)      the Person making the investment decision on behalf of such Assignee with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments, the Loan Documents and this Assignment and Assumption is independent (within the meaning of 29 CFR § 2510.3-21) and is a bank, an insurance carrier, an investment adviser, a broker-dealer or other person that has under management or control, total assets of at least $50 million, in each case as described in 29 CFR § 2510.3-21(c)(1)(A)-(E),
(iii)      the Person making the investment decision on behalf of such Assignee with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments, the Loan Documents and this Assignment and Assumption is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies,
(iv)      the Person making the investment decision on behalf of such Assignee with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments, the Loan Documents and this Assignment and Assumption is a fiduciary under ERISA or the Internal Revenue Code, or both, with respect to the Loans, the Letters of Credit, the Commitments, the Loan Documents and this Assignment and Assumption and is responsible for exercising independent judgment in evaluating the transactions hereunder, and
(v)      no fee or other compensation is being paid directly to the Administrative Agent, any Arranger, [the][any] Assignor or any their respective Affiliates for investment advice (as opposed to other services) in connection with the Loans, the Letters of Credit, the Commitments, the Loan Documents or this Assignment and Assumption.
2.     Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date. Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to [the][the relevant] Assignee.

3.     General Provisions . This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed


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counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.




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EXHIBIT D

FORM OF PARENT GUARANTY
FOURTH AMENDED AND RESTATED GUARANTY
(Parent)

This FOURTH AMENDED AND RESTATED GUARANTY (this “ Guaranty ”) dated August 11, 2017 made by INVESCO LTD. , an exempted company incorporated in the Islands of Bermuda (the “ Guarantor ”), in favor of the Administrative Agent, each of the L/C Issuers and each of the Lenders (as each such term is defined in the Credit Agreement referred to below).
PRELIMINARY STATEMENT.
A.    Invesco Finance PLC, a public limited company organized under the laws of England and Wales (the “ Borrower ”), the Guarantor, the lenders party thereto (the “ Existing Lenders ”), and the Administrative Agent are parties to that certain Third Amended and Restated Credit Agreement dated as August 7, 2015 (the “ Existing Credit Agreement ”);
B.    Pursuant to the Existing Credit Agreement, the Guarantor and the Administrative Agent entered into that certain Third Amended and Restated Guaranty dated as of August 7, 2015 (the “ Existing Guaranty ”);
C.    Pursuant to the terms of that certain Fourth Amended and Restated Credit Agreement, dated as of the date hereof, among the Borrower, the Guarantor, the Administrative Agent and each of the lenders now or hereafter party thereto (the “ Lenders ”) (as from time to time amended, revised, modified, supplemented or amended and restated, the “ Credit Agreement ”; all capitalized terms used but not otherwise defined herein shall have the meanings provided therefor in the Credit Agreement), the Lenders have agreed to continue the loans outstanding under the Existing Credit Agreement, and to amend and restate the credit facilities thereunder; and
D.    The Guarantor may receive a portion of the proceeds of the Advances under the Credit Agreement and will derive substantial direct and indirect benefit from the transactions contemplated by the Credit Agreement. It is a condition precedent to the effectiveness of the Credit Agreement and the making of Advances by the Lenders thereunder that the Existing Guaranty be amended and restated by the execution and delivery of this Guaranty by the Guarantor.
NOW, THEREFORE , in consideration of the premises and in order to induce the Lenders to make Advances under the Credit Agreement from time to time, the Guarantor hereby agrees as follows:
Section 1. Guaranty; Limitation of Liability . (a) The Guarantor hereby unconditionally and irrevocably guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all obligations of each other Loan Party now or hereafter existing under the Loan Documents, whether for principal, interest, fees, expenses or otherwise (such obligations, including, without limitation, the obligations of the Borrower under Section 2.15 of the Credit Agreement,


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being the “ Guaranteed Obligations ”), and agrees to pay any and all expenses (including reasonable counsel fees and expenses) incurred by the Administrative Agent, any L/C Issuer or any Lender in enforcing any rights under this Guaranty. Without limiting the generality of the foregoing, the Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by a Loan Party to the Administrative Agent, any L/C Issuer or any Lender under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such Loan Party.
(b)    The Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of any Loan Document, the absence of any action to enforce the same, any waiver or consent by the Administrative Agent, any L/C Issuer or any Lender with respect to any provisions hereof or thereof, the recovery of any judgment against the Borrower, any action to enforce the same, or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor (other than a defense of payment in full or complete performance). The Guarantor hereby waives the benefit of diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Borrower, any right to require a proceeding first against the Borrower, protest, notice and all demands whatsoever. This Guaranty is a guarantee of payment and not of collection.
(c)    Subject to reinstatement pursuant to Section 10 , the Guarantor hereby covenants that this Guaranty shall not be discharged except by complete performance of the obligations contained in the Credit Agreement, the Notes and this Guaranty.
(d)    The Guarantor, and by its acceptance of this Guaranty, the Administrative Agent, each L/C Issuer and each Lender, hereby confirms that it is the intention of all such Persons that this Guaranty and the obligations of the Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of bankruptcy law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Guaranty and the obligations of the Guarantor hereunder. To effectuate the foregoing intention, the Administrative Agent, the L/C Issuers, the Lenders and the Guarantor hereby irrevocably agree that the obligations of such Guarantor under this Guaranty at any time shall be limited to the maximum amount as will result in the obligations of such Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance.
Section 2. Waiver of Subrogation . Until the Credit Agreement is terminated and all of the Guaranteed Obligations have been paid in full, the Guarantor hereby irrevocably waives and agrees not to exercise any claim or other rights which it may now or hereafter acquire against the Borrower that arise from the existence, payment, performance or enforcement of the Borrower’s obligations under the Credit Agreement and the Guarantor’s obligations under this Guaranty, in any such instance including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, and any right to participate in any claim or remedy of the Administrative Agent, the L/C Issuers or the Lenders against the Borrower, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including,
without limitation, the right to take or receive from the Borrower, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim


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or other rights. If any amount shall be paid to the Guarantor in violation of the preceding sentence and any of the Guaranteed Obligations shall not have been paid in full, such amount shall have been deemed to have been paid to the Guarantor for the benefit of, and held in trust for the benefit of, the Administrative Agent, the L/C Issuers or the Lenders and shall forwith be paid to the Administrative Agent to be credited and applied to the Guaranteed Obligations in favor of the Administrative Agent, the L/C Issuers and the Lenders, whether matured or unmatured, in accordance with the terms of the Loan Documents. The Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waiver set forth in this Section 2 is knowingly made in contemplation of such benefits.
Section 3. No Set-Off . Each payment to be made by the Guarantor hereunder in respect of its obligations shall be payable in the currency or currencies in which such obligations are denominated, and shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.

Section 4. Obligations Absolute; Obligations Not Affected . The obligations of the Guarantor hereunder shall be continuing and shall remain in full force and effect until all of the Guaranteed Obligations have been paid and satisfied in full. The obligations of the Guarantor hereunder shall not be affected, impaired or diminished in any way by any act, omission, matter or thing whatsoever, occurring before, upon or after any demand for payment hereunder (and whether or not known or consented to by the Guarantor, the Administrative Agent, any of the L/C Issuers or any of the Lenders) which, but for this provision, might constitute a whole or partial defense to a claim against the Guarantor hereunder or might operate to release or otherwise exonerate the Guarantor from any of its obligations hereunder or otherwise affect such obligations, whether occasioned by default of any of the Lenders or otherwise, including, without limitation:

(a)    any limitation of status or power, disability, incapacity or other circumstance relating to the Borrower or any other Person, including any insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, winding-up or other proceeding involving or affecting the Borrower or any other Person;

(b)    any irregularity, defect, unenforceability or invalidity in respect of any indebtedness or other obligation of the Borrower or any other Person under the Loan Documents;

(c)    any failure of the Borrower, whether or not without fault on its part, to perform or comply with any of the provisions of any Loan Document to which it is a party, or to give notice thereof to the Guarantor;

(d)    the taking or enforcing or exercising or the refusal or neglect to take or enforce or exercise any right or remedy from or against the Borrower or any other Person or their respective assets or the release or discharge of any such right or remedy;


(e)    the granting of time, renewals, extensions, compromises, concessions, waivers, releases, discharges and other indulgences to the Borrower or any other Person;



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(f)    any change in the time, manner or place of payment of, or in any other term of, any of the Guaranteed Obligations, or any other amendment, variation, supplement, replacement or waiver of, or any consent to departure from, any of the Loan Documents, including, without limitation, any increase or decrease in the principal amount of or interest on Advances with respect to any of the Loan Documents;

(g)    any change in the ownership, control, name, objects, businesses, assets, capital structure or constitution of the Borrower, the Guarantor or any other Person;

(h)    the occurrence of any change in the laws, rules, regulations or ordinances of any jurisdiction by any present or future action of any governmental authority or court amending, varying, reducing or otherwise affecting, or purporting to amend, vary, reduce or otherwise affect, any of the Guaranteed Obligations or the obligations of the Guarantor under this Guaranty; and

(i)    any other circumstance that might otherwise constitute a legal or equitable discharge or defense of the Borrower under the Loan Documents to which it is a party or of the Guarantor in respect of this Guaranty (other than a defense of payment in full or complete performance).

Section 5. Waiver . Without in any way limiting the provisions of Section 1 hereof, the Guarantor hereby waives notice of acceptance hereof, notice of any liability of the Guarantor hereunder, notice or proof of reliance by the Administrative Agent, the L/C Issuers or the Lenders upon the obligations of the Guarantor hereunder, and diligence, presentment, demand for payment on the Borrower, protest, notice of dishonor or non-payment of any of the Guaranteed Obligations, or other notice or formalities to the Borrower or the Guarantor of any kind whatsoever.

Section 6. No Obligation To Take Action Against the Borrower . None of the Administrative Agent, any of the L/C Issuers or any of the Lenders shall have any obligation to enforce or exhaust any rights or remedies or to take any other steps under any security for the Guaranteed Obligations or against the Borrower or any other Person or any property of the Borrower or any other Person before the Administrative Agent, the L/C Issuers or the Lenders are entitled to demand payment and performance by the Guarantor of its liabilities and obligations under this Guaranty.

Section 7. Dealing with the Borrower and Others . The Administrative Agent, the L/C Issuers or the Lenders, without releasing, discharging, limiting or otherwise affecting in whole or in part the obligations and liabilities of the Guarantor hereunder and without the consent of or notice to the Guarantor, may:

(a)    grant time, renewals, extensions, compromises, concessions, waivers, releases, discharges and other indulgences to the Borrower or any other Person;


(b)    take or abstain from taking security or collateral from the Borrower or from perfecting security or collateral of the Borrower;



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(c)    release, discharge, compromise, realize, enforce or otherwise deal with or do any act or thing in respect of (with or without consideration) any and all collateral, mortgages or other security given by the Borrower or any third party with respect to the obligations or matters contemplated by the Loan Documents;

(d)    accept compromises or arrangements from the Borrower;

(e)    apply all monies at any time received from the Borrower or from any security upon such part of the obligations as the Lenders may see fit or change any such application in whole or in part from time to time as the Lenders may see fit; and

(f)    otherwise deal with, or waive or modify their right to deal with the Borrower and all other Persons and any security as the Lenders, the Administrative Agent or the L/C Issuers may see fit.

Section 8. Governing Law, Waiver of Jury Trial .
(a)      This Guaranty shall be governed by, and construed in accordance with, the laws of the State of New York.
(b)      The Guarantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the State of New York sitting in New York County and the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Guaranty, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. The Guarantor hereby agrees that service of process in any such action or proceeding brought in any such New York State court or in such federal court may be made upon the Guarantor c/o Invesco Group Services, Inc. at its offices at 1555 Peachtree Street N.E., Atlanta, Georgia 30309, Attention: General Counsel (the “ Process Agent ”), and hereby further agrees that the failure of the Process Agent to give any notice of any such service to the Guarantor shall not impair or affect the validity of such service or of any judgment rendered in any action or proceeding based thereon. The Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Guaranty shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Guaranty in the courts of any jurisdiction.
(c)      The Guarantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Guaranty in any New York State or federal court. The Guarantor hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.


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(d)      To the extent that the Guarantor has or hereafter may acquire any immunity from the 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 Guarantor hereby irrevocably waives such immunity in respect of its obligations under this Guaranty and the other Loan Documents.
(e)      The Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Guaranty shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Guaranty in the courts of any jurisdiction.
(f)      The Guarantor hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the transactions contemplated thereby or the actions of the Administrative Agent, any L/C Issuer or any Lender in the negotiation, administration, performance or enforcement thereof.
Section 9. Judgment .
(a)      Rate of Exchange . If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum due hereunder in another currency into Dollars, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which, in accordance with normal banking procedures, the Administrative Agent could purchase such other currency with Dollars in New York City, New York, at the close of business on the Business Day immediately preceding the day on which final judgment is given, together with any premiums and costs of exchange payable in connection with such purchase.
(b)      Indemnity . The obligation of the Guarantor in respect of any sum due from it to the Administrative Agent, any L/C Issuer or any Lender hereunder shall, notwithstanding any judgment in a currency other than Dollars, be discharged only to the extent that on the Business Day next succeeding receipt by the Administrative Agent, such L/C Issuer or such Lender of any sum adjudged to be so due in such other currency, the Administrative Agent, such L/C Issuer or such Lender, as the case may be, may, in accordance with normal banking procedures, purchase Dollars with such other currency. If the Dollars so purchased are less than the sum originally due to the Administrative Agent, such L/C Issuer or such Lender in Dollars, the Guarantor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent, such L/C Issuer or such Lender against such loss, and if the Dollars so purchased exceed the sum originally due to any of the Administrative Agent, any L/C Issuer or any Lender in Dollars, the Administrative Agent, such L/C Issuer or such Lender agrees to remit to the Guarantor such excess.
Section 10. Reinstatement . The Guarantor agrees that this Guaranty shall continue to be effective or be reinstated, as the case may be, at any time payment received by the Administrative Agent, any L/C Issuer or any Lender in respect of any Guaranteed Obligations is rescinded or must be restored for any reason, or is repaid by the Administrative Agent, any L/C Issuer or any Lender in whole or in part in good faith settlement of any pending or threatened avoidance claim.



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[Signature Page Follows]




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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.
INVESCO LTD.

By:         
Name:        
Title:    







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EXHIBIT E

FORM OF OPINION
OF U.S. COUNSEL FOR THE BORROWER AND THE PARENT

ALSTON & BIRD LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309-3424

404-881-7000
Fax:404-881-7777
www.alston.com



August 11, 2017

To each of the Lenders party
to the Fourth Amended and Restated Credit Agreement
dated as of August 11, 2017,
among Invesco Finance PLC, Invesco Ltd.,
said Lenders and Bank of America, N.A.,
as Administrative Agent

Ladies and Gentlemen:

We have acted as special counsel to Invesco Finance PLC, a public limited company organized under the laws of England and Wales (the “ Borrower ”) and Invesco Ltd., an exempted company incorporated in the Islands of Bermuda (the “ Parent ”; together with the Borrower, each individually a “ Loan Party ” and collectively, the “ Loan Parties ”), in connection with that certain Fourth Amended and Restated Credit Agreement dated as of the date hereof (the “ Credit Agreement ”) among the Borrower, the Parent, the Lenders party thereto (the “ Lenders ”) and Bank of America, N.A., as Administrative Agent (the “ Agent ”) for the Lenders and as Swingline Lender and an L/C Issuer. We have also acted as special counsel to the Parent in connection with that certain Fourth Amended and Restated Guaranty (Parent) dated as of the date hereof (the “ Parent Guaranty ”) in favor of the Agent, each of the L/C Issuers and each of the Lenders. This opinion is being delivered pursuant to Section 3.01(c)(vi) of the Credit Agreement. Capitalized terms used herein but not otherwise defined herein shall have the respective meanings accorded such terms in the Credit Agreement.

In rendering this opinion, we have reviewed the following documents, instruments and agreements (the following instruments and documents listed in items (a) – (c) below are collectively referred to herein as the “ Transaction Documents ”):



Atlanta • Charlotte • Dallas • Los Angeles • New York • Research Triangle • Silicon Valley • Ventura County • Washington, D.C.
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(a)    the Credit Agreement;

(b)    the Notes, each dated the date hereof; and

(c)    the Parent Guaranty.

In addition to the foregoing, we have reviewed (i) certificates of corporate officers and (ii) originals or copies, certified or otherwise identified to our satisfaction, of documents, corporate records, and other instruments, and made such further legal and factual examinations, as we have deemed necessary for the purposes of expressing the opinions set forth herein.

In making the examinations described above and in rendering the opinions expressed below, we have assumed: (a) the genuineness of all signatures, (b) the legal capacity of natural persons, (c) the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such documents, (d) the due authorization, execution and delivery of the Transaction Documents by all parties thereto, (e) that such Transaction Documents are legal, valid and binding obligations of the parties thereto enforceable against all such parties thereto (other than the Loan Parties), (f) all parties to the Transaction Documents have the full power, authority and legal right to perform their respective obligations under such Transaction Documents, (g) that all of the representations and warranties made by the Loan Parties in the Transaction Documents are true and correct as to the factual matters therein, (h) the Lenders and the Agent have acted in good faith and without notice of any defense against enforcement of rights created by the transactions (the “ Transactions ”) contemplated by the Credit Agreement and the other Transaction Documents, (i) each party to the Credit Agreement and the other Transaction Documents has complied with all laws applicable to it that affect the Transactions, (j) the Transactions comply with any test required by any applicable law of good faith or fairness, (k) each applicable law or regulation for which we are deemed to be responsible is published, accessible and generally available to lawyers practicing in the State of New York, (l) there is no understanding or agreement not embodied in the Transaction Documents among parties to the Transactions that would modify any term of a Transaction Document or any right or obligation of a party thereto, (m) with respect to the Transactions and the Transaction Documents, there has been no mutual mistake of fact and there exists no fraud or duress, (n) all of the requirements for a Lender making an assignment under Sections 8.11 and 8.06 of the Existing Credit Agreement have been satisfied pursuant to and in accordance with the terms of the Existing Credit Agreement, and (o) any deemed assignment occurring under Section 1.01(c) of the Credit Agreement will have the same force and effect as an assignment effected in accordance with Section 8.06(b) of the Existing Credit Agreement.

We have relied, with your permission, upon the representations and warranties contained in the Credit Agreement and the other Transaction Documents to the extent the same relate to





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matters of fact relevant to the opinions expressed herein and upon certificates of public officials and certain officers of each Loan Party with respect to the factual matters contained therein.

In addition we have assumed, with your permission, the following matters (as to which we understand you are relying solely upon the opinions of Linklaters LLP, U.K. counsel to the Borrower, and Appleby, Bermuda counsel to the Parent):

(a)    The Borrower is a public limited company formed and existing under the laws of England.

(b)     The Parent is an exempted company incorporated with limited liability and existing and in good standing under the laws of Bermuda.

(c)    The Borrower has the power to execute, deliver and perform the Transaction Documents to which it is a party, and the Parent has all requisite corporate power to enter into, execute, deliver and perform its obligations under the Transaction Documents to which it is a party.

(d) The execution, delivery and performance by each Loan Party of the Transaction Documents to which it is a party have been duly authorized by all requisite corporate action of such Loan Party.

(e) Each Loan Party has duly executed and delivered each Transaction Document to which it is a party.

(f) The entry into and performance of the Transaction Documents by the Borrower does not violate English law or the Memorandum or Articles of Association of the Borrower.

(g) The entry into and performance of the Transaction Documents by the Parent does not violate Bermuda law or the Certificate of Incorporation, Memorandum of Association or Second Amended and Restated Bye-Laws of the Parent.

(h) Under English law, there are no governmental or regulatory consents, approvals, or authorizations required by the Borrower for its entry into and performance of the Transaction Documents to which it is a party.

(i) Under Bermuda law, there are no governmental or regulatory consents, approvals, or authorizations required by the Parent for its entry into and performance of the Transaction Documents to which it is a party.






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Based upon the foregoing and subject to the assumptions, exceptions and qualifications set forth herein and Annex I hereto, we are of the opinion that:

1.    The Credit Agreement constitutes, and after giving effect to the initial Borrowing, each Note will constitute, a valid and legally binding obligation of the Borrower, enforceable in accordance with its terms, except to the extent that the enforcement thereof may be limited by the limitations set forth on Annex I hereto.

2.    Each of the Credit Agreement and the Parent Guaranty constitutes a valid and legally binding obligation of the Parent, enforceable in accordance with its terms, except to the extent that enforcement thereof may be limited by the limitations set forth in Annex I hereto.

3.    No approval, authorization or other action by, and no notice to or filing with, any governmental authority or regulatory body (each an “ Approval ”) is required under the laws of the State of New York or the United States of America for the valid execution, delivery and performance by (a) the Loan Parties of the Credit Agreement, (b) the Borrower of the Notes, or (c) the Parent of the Parent Guaranty, except such Approvals, if any, as have been obtained, given or made and reports required to be filed with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended.

4.    The execution and delivery by each Loan Party of the Transaction Documents to which it is a party and the performance of its obligations under such Transaction Documents will not constitute a violation of any existing constitutional provision, statute, or regulation of the State of New York or the United States of America.
    
Members of our firm are admitted to practice law in the State of New York, and we express no opinion as to the laws (including either of the Borrower’s or the Parent’s compliance or noncompliance with the laws) of any jurisdictions other than the federal laws of the United States and the laws of the State of New York.

This opinion is limited to the matters stated herein, and no opinion may be implied or inferred beyond those opinions expressly stated. Opinions rendered herein are as of the date hereof, and we make no undertaking and expressly disclaim any duty to supplement such opinions if, after the date hereof, facts and circumstances come to our attention or changes in the law occur which could affect such opinions. We express no opinion or advice as to any law (a) that might be violated by any misrepresentation, omission or fraudulent act, (b) to which either Loan Party may be subject as a result of your legal or regulatory status, your sale or transfer of any Loans or other Obligations or interests therein or your involvement in the transactions contemplated by the Transaction Documents, or (c) identified in clause (s) of Annex I. Notwithstanding anything to the contrary in this opinion letter, we express no opinion with respect to Section 8.21 of the Credit Agreement.








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This opinion is rendered solely for your benefit and for the benefit of any Lender that may hereafter become a Lender under the Credit Agreement. This opinion may not be used or relied upon by any other person or entity, and may not be disclosed, quoted, filed with a governmental agency or otherwise referred to without our prior written consent except to your bank examiners and any other governmental authority or self-regulatory body to which you report or to which you are subject to review, or as required by law or regulation or pursuant to legal process. This opinion may be disclosed to, but may not be relied upon by, your accountants, lawyers and other advisors so long as such accountants and other advisors agree not to disclose, quote or file this opinion without our prior written consent.


Very truly yours,

ALSTON & BIRD LLP


By:     
Partner


LEGAL02/37431993v5


ANNEX I

Enforceability Limitations


(a)    The effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights and remedies of creditors. This limitation includes the effect of the United States Bankruptcy Code (the “ Bankruptcy Code ”) in its entirety, including, without limitation, matters of contract rejection, fraudulent conveyance and obligation, turn-over, preference, equitable subordination, automatic stay, discharge, conversion of a non-recourse obligation into a recourse obligation, and substantive consolidation. It also includes state laws regarding fraudulent transfers, obligations, and conveyances, and state receivership laws.

(b)    The effect of general principles of equity, whether applied by a court of law or equity. This limitation includes the following concepts: (i) principles governing the availability of specific performance, injunctive relief or other traditional equitable remedies; (ii) principles affording traditional equitable defenses (e.g., waiver, laches and estoppel); (iii) good faith and fair dealing; (iv) reasonableness; (v) materiality of the breach; (vi) impracticability or impossibility of performance; (vii) the effect of obstruction or failure to perform or otherwise act in accordance with an agreement by any person; (viii) unconscionability and (ix) the possible unenforceability under certain circumstance of provisions providing for indemnification or contribution that are contrary to public policy.

(c)    The possible unenforceability of provisions purporting to waive certain rights of guarantors.

(d)    The possible unenforceability of provisions requiring indemnification for, or providing exculpation, release, or exemption from liability for, action or inaction, to the extent such action or inaction involves negligence or willful misconduct.

(e)    The possible unenforceability of provisions purporting to require arbitration of disputes.

(f)    The possible unenforceability of provisions imposing increased interest rates or late payment charges upon delinquency in payment or default or providing for liquidated damages or for premiums on prepayment, acceleration, redemption, cancellation, or termination, to the extent any such provisions are deemed to be penalties or forfeitures.

(g)    The possible unenforceability of waivers or advance consents that have the effect of (i) waiving statutes of limitation, marshaling of assets or similar requirements, (ii) consenting to or waiving objections to the jurisdiction of courts or the venue of actions, (iii) waiving the right to jury trial or, in certain cases, notices.

(h)    The possible unenforceability of provisions that waivers or consents by a party may not be given effect unless in writing or in compliance with particular requirements or that a person's course of dealing, course of performance, or the like or failure or delay in taking action



Form of Opinion of U.S. Counsel for the Borrower and the Parent


may not constitute a waiver of related rights or provisions or that one or more waivers may not under certain circumstances constitute a waiver of other matters of the same kind.

(i)    The effect of course of dealing, course of performance, or the like, that would modify the terms of an agreement or the respective rights or obligations of the parties under an agreement.

(j)    The possible unenforceability of provisions that enumerated remedies are not exclusive or that a party has the right to pursue multiple remedies without regard to other remedies elected or that all remedies are cumulative.

(k)    The possible unenforceability of provisions that determinations by a party or a party's designee are conclusive or deemed conclusive.

(l)    The possible unenforceability of provisions permitting modifications or amendments of an agreement only in writing.

(m)    The possible unenforceability of provisions that the provisions of an agreement are severable.

(n)    The effect of laws requiring mitigation of damages.

(o)    The possible unenforceability of provisions permitting the exercise, under certain circumstances, of rights without notice or without providing opportunity to cure failures to perform.

(p)    The effect of agreements or provisions in the Transaction Documents as to rights of set off otherwise than in accordance with the applicable law.

(q)    The effect of laws that govern and afford judicial discretion regarding the determination of damages and entitlement to attorneys’ fees and other costs.

(r)    The possible unenforceability of Section 6.01(h)(ii) of the Credit Agreement.

(s)    The following matters, including their effects and the effects of noncompliance, are not covered by implication or otherwise in any opinion expressed herein: (a) any statutes, administrative decisions, ordinances, rules or regulations of any county, municipality or other political subdivision of any state, (b) antitrust and unfair competition law, (c) securities law, (d) fiduciary obligations, (e) pension and employee benefit law (e.g., ERISA), (f) fraudulent transfer law, (g) environmental law, (h) land use and subdivision law, (i) Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (j) Exon-Florio Amendment under the Omnibus Trade and Competitiveness Act of 1988, (k) bulk transfer law, (l) tax law, (m) patent,


\9089893.2



copyright, trademark and other intellectual property law, (n) racketeering law (e.g., RICO), (o) criminal statutes of general application (e.g., mail fraud and wire fraud), (p) occupational health and safety law (e.g., OSHA), (q) labor law, (r) law concerning national or local emergency, possible deference to acts of sovereign states, and criminal and civil forfeiture laws, (s) law relating to permissible rates, computations, or disclosure of interest (e.g., usury), (t) any laws, regulations, directives and executive orders that prohibit or limit the enforceability of obligations based on attributes of the party seeking enforcement (e.g., the Trading with the Enemy Act and the International Emergency Economic Powers Act), (u) the Anti-Terrorism Order, as amended, all rules and regulations promulgated thereunder and all Federal, state and local laws, statutes, ordinances, orders, governmental rules, regulations, licensing requirements and policies relating to the Anti-Terrorism Order (including without limitation the Executive order of September 23, 2001 Blocking Property and Prohibiting Transactions with Persons Who Commit and Threaten to Commit or Support Terrorism) and the ownership and operation of, or otherwise regulation of, companies that conduct, operate or otherwise pursue the business or businesses now and in the future conducted, operated or otherwise pursued by either the Borrower or the Parent including, without limitation, the importation, transportation, manufacturing, dealing, purchase, use or storage of explosive materials, and (v) the USA Patriot Act of 2001 and the rules, regulations and policies promulgated thereunder and any foreign assets control regulations of the United States Treasury Department or any enabling legislation or orders relating thereto.

(t)    Our opinions are subject to the qualifications that (i) we have made such examination of New York law as we have deemed relevant for purposes of this opinion, but we have not made an independent examination and do not render any opinion, as to whether any specific provision of the Transaction Documents may be unenforceable by reason of being contrary to principles of public policy and (ii) we render no opinion as to the validity or enforceability of any provisions of the Transaction Documents whereby any party thereto purports to or attempts to waive any rights guaranteed by the Constitution of the United States or of the State of New York.

(u)    We have made no independent verification of any of the numbers, schedules, formulae or calculations in the Transaction Documents, and we render no opinion with regard to (i) the accuracy, validity or enforceability of any of them, (ii) whether the execution and delivery by any Loan Party of any Transaction Document to which it is a party or the performance by such Loan Party of its obligations thereunder will constitute a default under, or a violation of, any covenant, restriction or provision with respect to any of them, or (iii) any other aspect of the financial condition or results of operations of any Loan Party or any of its Subsidiaries.






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EXHIBIT F

FORM OF OPINION
OF U.K. COUNSEL FOR THE BORROWER

Dear Sirs



Linklaters LLP
One Silk Street
London EC2Y 8HQ
Telephone (+44) 20 7456 2000
Facsimile (+44) 20 7456 2222
DX Box Number 10 CDE

 
To the Administrative Agent and
the Lenders from time to time party to the Agreement
(as defined below)
c/o Bank of America, N.A.
 
 
 
11 August 2017
 
1
Introduction
We have acted as English legal advisers to Invesco Finance PLC (the “ Borrower ”) in its capacity as the borrower in connection with a fourth amended and restated credit agreement with a 5 year term (with an option to increase the total commitments to a maximum amount of $2,000,000,000) dated as of 11 August 2017 between, amongst others, the Borrower, Invesco Ltd., an exempted company organised under the laws of Bermuda, the Lenders named in it and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer (the " Agreement ") and the promissory notes to be issued to each of the Lenders named in the Agreement pursuant to the Agreement (the “ Notes ”).
2
English Law
This opinion is limited to English law as applied by the English courts and published and in effect on the date of this opinion. It is given on the basis that it and all matters relating to it will be governed by, and that it (including all terms used in it) will be construed in accordance with, English law.
3
Scope of Inquiry
For the purpose of this opinion, we have examined the following documents:
3.1
A PDF copy of the executed Agreement.
3.2
A template form of Note.






F-1
Form of Opinion of U.K. Counsel for the Borrower
92155415


3.3
A copy of the Certificate of Incorporation and the Certificates of Incorporation on Change of Name of the Borrower.
3.4
A copy of the Memorandum and Articles of Association of the Borrower.
3.5
A copy of a written resolution of the Directors of the Borrower dated 11 August 2017.
3.6
A certificate from the Borrower, dated 11 August 2017 in relation to the documents referred to above.
3.7
The results of an on-line search in respect of the Borrower on the Companies House Direct Service made on 11 August 2017 at 10:28am (the " Search ").
3.8
The results of a telephone search in respect of the Borrower at the Central Register of Winding Up Petitions made on 11 August 2017at 10:43am (the " Telephone Search ").
4
Assumptions
For the purpose of this opinion, we have made the following assumptions:
4.1
All copy documents conform to the originals and all originals are genuine and complete.
4.2
Each signature is the genuine signature of the individual concerned.
4.3
The documents referred to in paragraphs 3.3 and 3.4 are up-to-date.
4.4
The written resolutions referred to in paragraph 3.5 were validly passed and remain in full force and effect without modification.
4.5
The Agreement and the Notes are within the capacity and powers of, and have been validly authorised and signed by, each party other than the Borrower.
4.6
The Agreement and the Notes have been signed on behalf of the Borrower by the person(s) authorised by the written resolution referred to in paragraph 3.5.
4.7
The Agreement and the Notes are valid, binding and enforceable on each party under New York law by which they are expressed to be governed.
4.8
The Agreement and the Notes have the same meaning and effect under New York law as they would have if they were interpreted under English law by an English court and there are no provisions of New York law which would affect this opinion.
4.9
There are no dealings between the parties that affect the Agreement or the Notes.
4.10
None of the proceeds of the facilities provided pursuant to the Agreement will be used directly or indirectly to finance or refinance an acquisition of shares in contravention of Sections 678 or 679 of the Companies Act 2006 (as amended).
4.11
All applicable provisions of the Financial Services and Markets Act 2000 and any applicable secondary legislation made under it have been complied with with respect to the Agreement and the Notes.
4.12
The Notes are not and will not be offered or sold in the UK, except to any person whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses and no public offer of the Notes


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will be made in the UK, except in the circumstances set out in Section 86 of the Financial Services and Markets Act 2000.
4.13
With respect to the Notes, this opinion speaks as if the Notes have been entered into on the date of the Agreement in all material respects in the same form as the template referred to in paragraph 3.2.
5
Opinion
Based on the documents referred to and assumptions in paragraphs 3 and 4 and subject to the qualifications in paragraph 6 and to any matters not disclosed to us, we are of the following opinion:
5.1
The Borrower has been incorporated and is existing as a company with limited liability under the laws of England.
5.2
The Borrower has the corporate power to enter into and perform the Agreement and the Notes.
5.3
The Borrower has taken all necessary corporate action to authorise its entry into and performance of the Agreement and the Notes.
5.4
Under English law, there are no governmental or regulatory consents, approvals or authorisations required by the Borrower for its entry into and performance of the Agreement or the Notes.
5.5
Under English law, there are no registration, filing or similar formalities required to ensure the legality, validity, binding effect and enforceability against the Borrower of the Agreement or the Notes.
5.6
The entry into and performance of the Agreement and the Notes by the Borrower does not violate English law or the Memorandum or Articles of Association of the Borrower.
5.7
Save for in the circumstances set out in paragraphs 6.11 and 6.12, if proceedings were brought before the English courts and the choice of New York law as the governing law of the Agreement is pleaded and proved as a fact in accordance with English procedural and evidential rules, the choice of New York law as the governing law of the Agreement would be recognised in England.
5.8
A final and conclusive judgment against the Borrower for the payment of a specific sum of money rendered by a United States Federal or New York State court sitting in New York City arising out of or in connection with the Agreement or the Notes will be recognised by and enforceable in the English courts as creating a debt enforceable against the Borrower if:
(i)
the foreign court had jurisdiction over the Borrower in accordance with English law (and, in our opinion, for these purposes, the English courts will recognise a contractual submission to the jurisdiction of a United States Federal or New York State court sitting in New York City);
(ii)
the foreign judgment was not contrary to English public policy, for multiple damages or based on a provision of law specified under the Protection of Trading Interests Act 1980 nor obtained by fraud or in breach of the rules of natural justice;



\9089893.2



(iii)
the foreign judgment was not inconsistent with an earlier judgment relating to the same issue of a court having jurisdiction over the matter;
(iv)
the foreign judgment does not require the Borrower to perform an act which would be illegal in the country of performance; and
(v)
the foreign proceedings were not of a revenue or penal nature.
Enforcement of the judgment may, however, be stayed if it is subject to appeal in the country in which it was given.
5.9
No stamp duty or registration or similar tax is payable under English law in connection with the parties entering into the Agreement or the Notes.
6
Qualifications
This opinion is subject to the following qualifications:
6.1
This opinion is subject to any limitations arising from bankruptcy, insolvency, liquidation, moratorium, reorganisation and other laws of general application relating to or affecting the rights of creditors.
6.2
The enforcement in England of the Agreement, the Notes and of foreign judgments will be subject to English rules of civil procedure.
6.3
In England, remedies such as specific performance and injunction may not be available.
6.4
An English court may not give effect to Section 8.04 ( Expenses; Indemnity; Damage Waiver ) of the Agreement in respect of the costs of litigation brought before an English court.
6.5
A certificate, determination, notification, opinion or the like might be held by the English courts not to be conclusive, final or binding if it could be shown to have an unreasonable or arbitrary basis or in the event of manifest error despite any provision in the Agreement to the contrary.
6.6
We do not express any opinion as to any taxation matters, except for paragraph 5.9.
6.7
Claims may become barred under the Limitation Act 1980.
6.8
So far as they relate to United Kingdom stamp duties, the undertakings and indemnities given by the Borrower in Section 2.15 ( Taxes ) of the Agreement may be void under Section 117 of the Stamp Act 1891.
6.9
Any provision of the Agreement which constitutes, or purports to constitute, a restriction on the exercise of any statutory power may be ineffective.
6.10
Our opinion that the Borrower is existing is based on the Search and the Telephone Search. It should be noted that the Search and the Telephone Search are not capable of revealing conclusively whether or not a winding-up or administration petition or order has been presented or made, a receiver appointed, a company voluntary arrangement proposed or approved or any other insolvency proceeding commenced.




\9089893.2



6.11
If proceedings were brought before the English courts, effect may be given to the overriding mandatory provisions of the law of the country where the obligations arising out of a contract have to be or have been performed, in so far as those provisions render the performance of the contract unlawful. In such circumstances, the relevant obligations may not be enforceable.
6.12
Further circumstances referred to in paragraph 5.7 are as follows:
(a)
where all other elements relevant to the Agreement at the time of the choice are located in:
(i)
a country other than the United States, it is possible that the choice of New York law will not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement;
(ii)
one or more EU Member States, it is possible that the choice of New York law will not prejudice the application of provisions of EU law (where appropriate, as implemented in England) which cannot be derogated from by agreement;
(b)
the English courts may have regard to the law of the country in which performance takes place in relation to the manner of performance and the steps to be taken in the event of defective performance; and
(c)
the English courts may not be restricted from applying overriding mandatory provisions of English law and if there is a provision of New York law that is manifestly incompatible with English public policy, it is possible that the English courts may not apply it.
6.13
Any provision of the Agreement which restricts or purports to restrict the Borrower’s choice of statutory auditor may be ineffective under Regulation (EU) 537/2014 and/or Directive 2014/56/EU.
7
Reliance
This opinion is solely for your benefit and solely for the purpose of the Agreement and the Notes. It is not to be transmitted to anyone else nor is it to be relied upon by anyone else or for any other purpose or quoted or referred to in any public document or filed with anyone without our written consent, except as otherwise required by law or regulation or in connection with any legal proceedings in relation to the Agreement or the Notes, and provided that a copy may be provided to your professional advisers, auditors and regulators, solely for the purpose of the Agreement and the Notes and of giving their opinion and subject to the same restrictions.
Yours faithfully


Linklaters LLP




\9089893.2



EXHIBIT G

FORM OF OPINION
OF BERMUDA COUNSEL FOR THE PARENT


Bank of America, N.A.
as Administrative Agent for the Lenders
101 N Tryon Street
Charlotte, NC
28255 USA

The Lenders from time to time party to the Fourth
Amended and Restated Credit Agreement   (as defined below)  
c/o Bank of America, N.A.
101 N Tryon Street
Charlotte, NC
28255 USA




Email   jwilson@applebyglobal.com
Direct Dial   +1 441 298 3559
Tel   +1 441 295 2244
Fax   +1 441 292 8666

Your Ref

Appleby Ref   137506.033/JW

11 August 2017



Dear Sirs
 
Invesco Ltd. (Company)
We have acted as Bermuda legal counsel to the Company in connection with the fourth amended and restated credit agreement among Invesco Finance PLC, as Borrower, the Company, as Parent, Bank of America, N.A., as administrative agent for the Lenders ( Administrative Agent ), Swing Line Lender and an L/C Issuer, and each of the Initial Lenders dated 11 August 2017 ( Fourth Amended and Restated Credit Agreement ). We have been asked to provide this legal opinion in connection with Section 3.01(c)(viii) of the Fourth Amended and Restated Credit Agreement in respect of the following agreements:
(i)
the Fourth Amended and Restated Credit Agreement; and
(ii)
the Fourth Amended and Restated Parent Guaranty (as defined in the schedule to this opinion (Schedule)).
(The Fourth Amended and Restated Credit Agreement and the Fourth Amended and Restated Parent Guaranty are hereinafter collectively referred to as the Subject Agreements )
For the purposes of this opinion we have examined and relied upon the documents ( Documents ) listed, and in some cases defined, in the Schedule together with such other documentation as we have considered requisite to this opinion. Unless otherwise defined herein, capitalised terms have the meanings assigned to them in the Fourth Amended and Restated Credit Agreement.
1.
Assumptions



92155415


In stating our opinion we have assumed:
1.1
the authenticity, accuracy and completeness of all Documents and other documentation examined by us submitted to us as originals and the conformity to authentic original documents of all Documents and other such documentation submitted to us as certified, conformed, notarised, faxed or photostatic copies;
1.2
that each of the Documents and other such documentation which was received by electronic means is complete, intact and in conformity with the transmission as sent;
1.3
the genuineness of all signatures on the Documents;
1.4
the authority, capacity and power of each of the persons signing the Documents (other than the Company in respect of the Subject Agreements);
1.5
that any representation, warranty or statement of fact or law, other than as to the laws of Bermuda, made in any of the Documents is true, accurate and complete;
1.6
that the Subject Agreements constitute the legal, valid and binding obligations of each of the parties thereto, other than the Company, under the laws of its jurisdiction of incorporation or its jurisdiction of formation;
1.7
that the Subject Agreements have been validly authorised, executed and delivered by each of the parties thereto, other than the Company, and the performance thereof is within the capacity and powers of each such party thereto, and that each such party to which the Company purportedly delivered the Subject Agreements has actually received and accepted delivery of such Subject Agreements;
1.8
that the Subject Agreements will effect, and will constitute legal, valid and binding obligations of each of the parties thereto, enforceable in accordance with their terms, under the laws of the State of New York by which they are expressed to be governed;
1.9
that the Subject Agreements are in the proper legal form to be admissible in evidence and enforced in the courts of the State of New York sitting in New York County and the United States District Court of the Southern District of New York ( New York Courts ) and in accordance with the laws of the State of New York;
1.10
that there are no provisions of the laws or regulations of any jurisdiction other than Bermuda which would be contravened by the execution or delivery of the Subject Agreements or which would have any implication in relation to the opinion expressed herein and that, in so far as any obligation under, or action to be taken under, the Subject Agreements is required to be performed or taken in any jurisdiction outside Bermuda, the performance of such obligation or the taking of such action will constitute a valid and binding obligation of each of the parties thereto under the laws of that jurisdiction and will not be illegal by virtue of the laws of that jurisdiction;


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1.11
that none of the parties to the Subject Agreements maintains a place of business (as defined in section 4(6) of the Investment Business Act 2003), in Bermuda;
1.12
that the records which were the subject of the Company Search were complete and accurate at the time of such search and disclosed all information which is material for the purposes of this opinion and such information has not since the date and time of the Company Search been materially altered;
1.13
that the records which were the subject of the Litigation Search were complete and accurate at the time of such search and disclosed all information which is material for the purposes of this opinion and such information has not since the date and time of the Litigation Search been materially altered;
1.14
that the Resolutions are in full force and effect, have not been rescinded, either in whole or in part, and accurately record the resolutions passed by the Board of Directors of the Company ( Board ) in a meeting which was duly convened and at which a duly constituted quorum was present and voting throughout or adopted by the ad hoc committee of the Board as unanimous written resolutions of the ad hoc committee, as the case may be, and that there is no matter affecting the authority of the Directors of the Company to effect entry by the Company into the Subject Agreements, not disclosed by the Constitutional Documents or the Resolutions, which would have any adverse implication in relation to the opinions expressed herein;
1.15
that the Administrative Agent and the Lenders from time to time party to the Fourth Amended and Restated Credit Agreement have no express or constructive knowledge of any circumstance whereby any Director of the Company, when the Board or the ad hoc committee, as the case may be, passed the Resolutions, failed to discharge his fiduciary duty owed to the Company and to act honestly and in good faith with a view to the best interests of the Company;
1.16
that the Company has entered into its obligations under the Subject Agreements in good faith for the purpose of carrying on its business and that, at the time it did so, there were reasonable grounds for believing that the transactions contemplated by the Subject Agreements would benefit the Company; and
1.17
that each transaction to be entered into pursuant to the Subject Agreements is entered into in good faith and for full value and will not have the effect of preferring one creditor over another.
2.
Opinion
Based upon and subject to the foregoing and subject to the reservations set out below and to any matters not disclosed to us, we are of the opinion that:
2.1
The Company is an exempted company incorporated with limited liability and existing under the laws of Bermuda. The Company possesses the capacity to sue and be sued in its own name and is in good standing under the laws of Bermuda.


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2.2
The Company has all requisite corporate power and authority to enter into, execute, deliver, and perform its obligations under the Subject Agreements and to take all action as may be necessary to complete the transactions contemplated thereby.
2.3
The execution, delivery and performance by the Company of the Subject Agreements and the transactions contemplated thereby have been duly authorised by all necessary corporate action on the part of the Company.
2.4
The Subject Agreements have been duly executed by the Company and each constitutes legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms.
2.5
Subject as otherwise provided in this opinion, no consent, licence or authorisation of, filing with, or other act by or in respect of, any governmental authority or court of Bermuda is required to be obtained by the Company in connection with the execution, delivery or performance by the Company of the Subject Agreements or to ensure the legality, validity, admissibility into evidence or enforceability as to the Company, of the Subject Agreements.
2.6
The execution, delivery and performance by the Company of the Subject Agreements and the transactions contemplated thereby do not and will not violate, conflict with or constitute a default under (i) any requirement of any law or any regulation of Bermuda or (ii) the Constitutional Documents.
2.7
The choice of the laws of the State of New York as the proper law to govern the Subject Agreements is a valid choice of law under Bermuda law and such choice of law would be recognised, upheld and applied by the courts of Bermuda as the proper law of the Subject Agreements in proceedings brought before them in relation to the Subject Agreements, provided that (i) the point is specifically pleaded; (ii) such choice of law is valid and binding under the laws of the State of New York; and (iii) recognition would not be contrary to public policy as that term is understood under Bermuda law (and, as at the date of this opinion, we are not aware of any reason why such recognition would be contrary to public policy as that term is understood under Bermuda law).
2.8
The submission by the Company to the jurisdiction of the New York Courts is not contrary to Bermuda law and would be recognised by the courts of Bermuda as a legal, valid and binding submission to the jurisdiction of the New York Courts, if such submission is accepted by such courts and is legal, valid and binding under the laws of the State of New York.
2.9
A final and conclusive judgment of a competent foreign court against the Company based upon the Subject Agreements (other than a court of jurisdiction to which The Judgments (Reciprocal Enforcement) Act 1958 applies, and it does not apply to the New York Courts) under which a sum of money is payable (not being a sum payable in respect of taxes or other charges of a like nature, in respect of a fine or other penalty, or in respect of multiple damages as defined in The Protection of Trading Interests Act 1981) may be the subject of enforcement proceedings


\9089893.2



in the Supreme Court of Bermuda under the common law doctrine of obligation by action on the debt evidenced by the judgment of such competent foreign court. A final opinion as to the availability of this remedy should be sought when the facts surrounding the foreign court’s judgment are known, but, on general principles, we would expect such proceedings to be successful provided that:
2.9.1
the court which gave the judgment was competent to hear the action in accordance with private international law principles as applied in Bermuda; and
2.9.2
the judgment is not contrary to public policy in Bermuda, has not been obtained by fraud or in proceedings contrary to natural justice and is not based on an error in Bermuda law.
Enforcement of such a judgment against assets in Bermuda may involve the conversion of the judgment debt into Bermuda dollars, but the Bermuda Monetary Authority has indicated that its present policy is to give the consents necessary to enable recovery in the currency of the obligation.
No stamp duty or similar or other tax or duty is payable in Bermuda on the enforcement of a foreign judgment. Court fees will be payable in connection with proceedings for enforcement.
2.10
Based solely upon the Company Search and the Litigation Search:
2.10.1
no litigation, administrative or other proceeding of or before any governmental authority of Bermuda is pending against the Company; and
2.10.2
no notice to the Registrar of Companies of the passing of a resolution of members or creditors to wind up or the appointment of a liquidator or receiver has been given. No petition to wind up the Company or application to reorganise its affairs pursuant to a scheme of arrangement or application for the appointment of a receiver has been filed with the Supreme Court.
2.11
The Company has received an assurance from the Ministry of Finance granting an exemption, until 31 March 2035, from the imposition of tax under any applicable Bermuda law computed on profits or income or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, provided that such exemption shall not prevent the application of any such tax or duty to such persons as are ordinarily resident in Bermuda and shall not prevent the application of any tax payable in accordance with the provisions of the Land Tax Act 1967 or otherwise payable in relation to land in Bermuda leased to the Company. There are, subject as otherwise provided in this opinion, no Bermuda taxes, stamp or documentary taxes, duties or similar charges now due, or which could in the future become due, in connection with the execution, delivery, performance or enforcement of the Subject Agreements or the transactions contemplated thereby, or in connection with the admissibility in




\9089893.2



evidence thereof and the Company is not required by any Bermuda law or regulation to make any deductions or withholdings in Bermuda from any payment it may make thereunder.
3.
Reservations
We have the following reservations:
3.1
The term “enforceable” as used in this opinion means that there is a way of ensuring that each party performs an agreement or that there are remedies available for breach.
3.2
We express no opinion as to the availability of equitable remedies such as specific performance or injunctive relief, or as to any matters which are within the discretion of the courts of Bermuda in respect of any obligations of the Company as set out in the Subject Agreements. In particular, we express no opinion as to the enforceability of any present or future waiver of any provision of law (whether substantive or procedural) or of any right or remedy which might otherwise be available presently or in the future under the Subject Agreements.
3.3
Enforcement of the obligations of the Company under the Subject Agreements may be limited or affected by applicable laws from time to time in effect relating to bankruptcy, insolvency or liquidation or any other laws or other legal procedures affecting generally the enforcement of creditors’ rights.
3.4
Enforcement of the obligations of the Company may be the subject of a statutory limitation of the time within which such proceedings may be brought.
3.5
We express no opinion as to any law other than Bermuda law and none of the opinions expressed herein relates to compliance with or matters governed by the laws of any jurisdiction except Bermuda. This opinion is limited to Bermuda law as applied by the Courts of Bermuda at the date hereof.
3.6
Where an obligation is to be performed in a jurisdiction other than Bermuda, the courts of Bermuda may refuse to enforce it to the extent that such performance would be illegal under the laws of, or contrary to public policy of, such other jurisdiction.
3.7
We express no opinion as to the validity, binding effect or enforceability of any provision incorporated into any of the Subject Agreements by reference to a law other than that of Bermuda, or as to the availability in Bermuda of remedies which are available in other jurisdictions.
3.8
Where a person is vested with a discretion or may determine a matter in his or its opinion, such discretion may have to be exercised reasonably or such an opinion may have to be based on reasonable grounds.
3.9
Any provision in the Subject Agreements that certain calculations or certificates will be conclusive and binding will not be effective if such calculations or certificates are fraudulent or



\9089893.2



erroneous on their face and will not necessarily prevent juridical enquiries into the merits of any claim by an aggrieved party.
3.10
We express no opinion as to the validity or binding effect of any provision in the Subject Agreements for the payment of interest at a higher rate on overdue amounts than on amounts which are current, or that liquidated damages are or may be payable. Such a provision may not be enforceable if it could be established that the amount expressed as being payable was in the nature of a penalty; that is to say a requirement for a stipulated sum to be paid irrespective of, or necessarily greater than, the loss likely to be sustained. If it cannot be demonstrated to the Bermuda court that the higher payment was a reasonable pre-estimate of the loss suffered, the court will determine and award what it considers to be reasonable damages. Section 9 of The Interest and Credit Charges (Regulations) Act 1975 provides that the Bermuda courts have discretion as to the amount of interest, if any, payable on the amount of a judgment after date of judgment. If the Court does not exercise that discretion, then interest will accrue at the statutory rate which is currently 3.5% per annum.
3.11
We express no opinion as to the validity or binding effect of any provision of the Subject Agreements which provides for the severance of illegal, invalid or unenforceable provisions.
3.12
A Bermuda court may refuse to give effect to any provisions of the Subject Agreements in respect of costs of unsuccessful litigation brought before the Bermuda court or where that court has itself made an order for costs.
3.13
Searches of the Register of Companies at the office of the Registrar of Companies and of the Supreme Court Causes Book at the Registry of the Supreme Court are not conclusive and it should be noted that the Register of Companies and the Supreme Court Causes Book do not reveal:
3.13.1
details of matters which have been lodged for filing or registration which as a matter of best practice of the Registrar of Companies or the Registry of the Supreme Court would have or should have been disclosed on the public file, the Causes Book or the Judgment Book, as the case may be, but for whatever reason have not actually been filed or registered or are not disclosed or which, notwithstanding filing or registration, at the date and time the search is concluded are for whatever reason not disclosed or do not appear on the public file, the Causes Book or Judgment Book;
3.13.2
details of matters which should have been lodged for filing or registration at the Registrar of Companies or the Registry of the Supreme Court but have not been lodged for filing or registration at the date the search is concluded;
3.13.3
whether an application to the Supreme Court for a winding-up petition or for the appointment of a receiver or manager has been prepared but not yet been



\9089893.2



presented or has been presented but does not appear in the Causes Book at the date and time the search is concluded;
3.13.4
whether any arbitration or administrative proceedings are pending or whether any proceedings are threatened, or whether any arbitrator has been appointed; or
3.13.5
whether a receiver or manager has been appointed privately pursuant to the provisions of a debenture or other security, unless notice of the fact has been entered in the Register of Charges in accordance with the provisions of the Companies Act 1981.
Furthermore, in the absence of a statutorily defined system for the registration of charges created by companies incorporated outside Bermuda ( overseas companies ) over their assets located in Bermuda, it is not possible to determine definitively from searches of the Register of Charges maintained by the Registrar of Companies in respect of such overseas companies what charges have been registered over any of their assets located in Bermuda or whether any one charge has priority over any other charge over such assets.
3.14
In order to issue this opinion we have carried out the Company Search and have not enquired as to whether there has been any change since the date and time of such search.
3.15
In order to issue this opinion we have carried out the Litigation Search and have not enquired as to whether there has been any change since the date and time of such search.
3.16
In paragraph 2.1 above, the term “good standing” means that the Company has received a Certificate of Compliance from the Registrar of Companies.
4.
Disclosure
This opinion is addressed to you solely for your benefit and is neither to be transmitted to any other person (other than your legal advisors, accountants and auditors), nor relied upon by any other person or for any other purpose nor quoted or referred to in any public document nor filed with any governmental agency or person, without our prior written consent, except as may be required by law or regulatory authority. Further, this opinion speaks as of its date and is strictly limited to the matters stated herein and we assume no obligation to review or update this opinion if applicable law or the existing facts or circumstances should change.
This opinion is governed by and is to be construed in accordance with Bermuda law. It is given on the basis that it will not give rise to any legal proceedings with respect thereto in any jurisdiction other than Bermuda.
Yours faithfully
Appleby (Bermuda) Limited


\9089893.2




SCHEDULE
1.
The entries and filings shown in respect of the Company on the file of the Company maintained in the Register of Companies at the office of the Registrar of Companies in Hamilton, Bermuda, as revealed by a search conducted on 10 August 2017 at 4:00pm (Bermuda time) ( Company Search ).
2.
The entries and filings shown in respect of the Company in the Supreme Court Causes Book maintained at the Registry of the Supreme Court in Hamilton, Bermuda, as revealed by a search conducted on 10 August 2017 at 2:45pm (Bermuda time) ( Litigation Search ).
3.
Certified copies of the Certificate of Incorporation, Memorandum of Association and Third Amended and Restated Bye-Laws of the Company effective as of 11 May 2017 (collectively referred to as Constitutional Documents ).
4.
A Certificate of Compliance, dated 9 August 2017 issued by the Registrar of Companies in respect of the Company.
5.
A certified extract of resolutions of the Board of Directors of the Company passed at a meeting of the Board of Directors of the Company on 20 July 2017 creating the Ad Hoc Committee of the Board of Directors of the Company and a certified extract of the unanimous written consent of the Ad Hoc Committee of the Board of Directors of the Company effective 7 August 2017 ( Resolutions ).
6.
A certified copy of the “Foreign Exchange Letter”, dated 12 September 2007, issued by the Bermuda Monetary Authority, Hamilton Bermuda in relation to the Company.
7.
A certified copy of the “Tax Assurance”, dated 22 November 2012, issued by the Registrar of Companies in respect to the Company.
8.
A copy of the Register of Directors and Officers in respect of the Company dated 10 August 2017.
9.
A PDF copy of the executed Fourth Amended and Restated Credit Agreement.
10.
A PDF copy of the executed Fourth Amended and Restated Parent Guaranty dated 11 August 2017 between the Company in favour of the Administrative Agent and the Lenders ( Fourth Amended and Restated Guaranty ).







\9089893.2



EXHIBIT H

FORM OF COMPLIANCE CERTIFICATE
Statement Date: __________, _____
To:    Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Fourth Amended and Restated Credit Agreement dated as of August 11, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among INVESCO FINANCE PLC, a public limited company organized under the laws of England and Wales (the “ Borrower ”), INVESCO LTD. (the “ Parent ”), the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer. Capitalized terms used but not defined herein shall have the meanings specified therefor in the Credit Agreement.
 
Check for distribution to PUBLIC and  Private side Lenders
The undersigned hereby certifies as of the date hereof that he/she is the chief financial officer of the Parent, and that, as such, he/she is authorized to execute and deliver this Compliance Certificate to the Administrative Agent on the behalf of the Parent and the Borrower, and that:
[Use following paragraph 1 for fiscal year-end financial statements]
1.    The Parent has delivered the audited financial statements required by Section 5.01(h)(ii) of the Credit Agreement for the fiscal year of the Parent ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.
[Use following paragraph 1 for fiscal quarter-end financial statements]
1.    The Parent has delivered the unaudited financial statements required by Section 5.01(h)(i) of the Credit Agreement for the fiscal quarter of the Parent ended as of the above date. Such financial statements fairly present the financial condition, results of operations and cash flows of the Parent and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.


_____________________________
1 If this is not checked, this certificate will only be posted to Private side Lenders.



H-1
Form of Compliance Certificate
92155415


2.    The undersigned has reviewed and is familiar with the terms of the Credit Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of each of the Parent and the Borrower during the accounting period covered by such financial statements.
3.    A review of the activities of the Parent and the Borrower during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Parent and the Borrower performed and observed all its Obligations under the Loan Documents, and
[select one:]
[to the best knowledge of the undersigned during such fiscal period, each of the Parent and the Borrower performed and observed each covenant and condition of the Loan Documents applicable to it, and no Default has occurred and is continuing.]
--or--
[to the best knowledge of the undersigned, during such fiscal period the following covenants or conditions have not been performed or observed and the following is a list of each such Default and its nature and status:]
4.    The financial covenant analyses and information set forth on Schedule 1 attached hereto are true and accurate on and as of the date of this Compliance Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate as of _______________, _____.
INVESCO LTD.

By:     
Name:     
Title:     



H-2
Form of Compliance Certificate
92155415


For the Month/Quarter/Year ended ___________________(“ Statement Date ”)
SCHEDULE 1
to the Compliance Certificate
($ in 000’s)
I.
Section 5.03(a) – Debt/EBITDA Ratio.
A.    Adjusted Debt less excluded items as of Statement Date:    
1.
Adjusted Debt:

$______________

2.
Subsidiary Non-Recourse Debt:

$______________

3.
Liabilities with respect to the Office Equipment Sale and Leaseback Lease (so long as the Parent and its Subsidiaries own 100% of the Office Equipment Sale and Leaseback Bonds):

$______________

4.
Qualified Equity Portion of Qualified Securities to the extent such amount is otherwise included in Adjusted Debt:
$______________
5.
Permitted Unit Investment Trust Debt:

$______________ 2

6.
Adjusted Debt less excluded items for purposes of computing the Debt/EBITDA Ratio (Lines I.A.1 - 2 - 3 - 4 - 5):

$______________

B.    EBITDA less excluded items for four consecutive fiscal quarters ending on above date (“ Subject Period ”):    
1.
Net income of the Parent and its Subsidiaries, on a consolidated basis, excluding consolidated investment products, for Subject Period:

$______________

2.
Interest expense for Subject Period:

$______________

3.
Income tax expense for Subject Period:
$______________
4.
Depreciation expense for Subject Period:

$______________

5.
Amortization expense for Subject Period:
$______________

6.
Extraordinary losses for Subject Period:
$______________

7.
Exceptional losses for Subject Period:

$______________


_______________________________
2 To the extent (A) such Permitted Unit Investment Trust Debt has not been outstanding for longer than 5 consecutive Business Days after the incurrence thereof and (B) the assets of the unit investment trust Subsidiary incurring such Permitted Unit Investment Trust Debt equal or exceed the amount of such Permitted Unit Investment Trust Debt; provided, that if the assets of such unit investment trust Subsidiary do not equal or exceed the amount of such Permitted Unit Investment Trust Debt, the amount of Permitted Unit Investment Trust Debt included in Line I.A.5 shall b limited to the amount of the assets of such unit investment trust Subsidiary.


H-3
Form of Compliance Certificate
92155415


8.
Non-cash charges exclusive of any non-cash charge to the extent it represents a reserve for cash expenditures in any future period for Subject Period:
$______________
9.
Extraordinary gains for Subject Period:
$______________

10.
Exceptional gains for Subject Period:
$______________
11.
Non-cash gains exclusive of gains for which the Parent expects cash proceeds in a future period for Subject Period:
$______________
12.
EBITDA (Lines I.B.1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 - 9 - 10 - 11):
$______________
13.
Portion of EBITDA attributable to the net income, expenses, losses, charges and gains of each Special Purpose Subsidiary:
$______________
14
EBITDA less  excluded items for purposes of computing the Financial Covenants for Subject Period (Lines I.B.12 - 13):
$______________
C.
Debt/EBITDA Ratio as of the Statement Date (Line
I.A.6 ÷ Line I.B.14): __________________ to 1.00
Maximum Permitted: 3.25 to 1     
II.
Section 5.03(b) – Coverage Ratio.
A.
EBITDA less  excluded items for purposes of computing the Financial Covenants for Subject Period (Line I.B.14):
$______________
B.
Interest payable on, and amortization of debt discount in respect of, Adjusted Debt (excluding from Adjusted Debt for purposes of computing this amount: (i) Subsidiary Non-Recourse Debt and (ii) so long as the Parent and its Subsidiaries own 100% of the Office Equipment Sale and Leaseback Bonds, liabilities with respect to the Office Equipment Sale and Leaseback Lease, in each case to the extent otherwise included in Adjusted Debt):
$______________
C.
Coverage Ratio as of the Statement Date (Line II.A ÷ Line II.B):
$__________ to 1.00
Minimum Required:                         4.00 to 1.00


H-4
Form of Compliance Certificate
92155415


EXHIBIT I

FORM OF U.K. TAX COMPLIANCE CERTIFICATE
Reference is made to that certain Fourth Amended and Restated Credit Agreement dated as of August 11, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among INVESCO FINANCE PLC, a public limited company organized under the laws of England and Wales (the “ Borrower ”), INVESCO LTD., the Lenders from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer. Capitalized terms used but not defined herein shall have the meanings specified therefor in the Credit Agreement.
The undersigned hereby certifies under penalty of perjury that:
(1)    The undersigned is a “bank” within the meaning of Section 879 of the Income Tax Act 2007 of the United Kingdom; and
(2)    The undersigned is within the charge to corporation tax in the United Kingdom with respect to payments under the Credit Agreement.
[ NAME OF LENDER ]
By:     
Name:     
Title:     
Address:

[__________________________________]
[__________________________________]
[__________________________________]


Dated: _______________, 20__





I-1
Form of U.K. Tax Compliance Certificate
92155415

Exhibit 10.2











TRANSACTION AGREEMENT

dated as of

September 28, 2017

between

INVESCO LTD.

and

GUGGENHEIM CAPITAL, LLC





Exhibit 10.2

TABLE OF CONTENTS

PAGE
ARTICLE 1
DEFINITIONS
1.01 . Definitions
5
. Other Definitional and Interpretative Provisions
19
ARTICLE 2
PURCHASE AND SALE
. Purchase and Sale
20
. Closing
20
. Closing Revenue Run-Rate Purchase Price Adjustment.
21
. True-Up
21
Purchase Price Allocation
22
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
. Organization and Qualification
23
. Ownership
24
. Corporate Authority
24
. Binding Effect
24
. Governmental Consents and Approvals
24
. Non-Contravention
25
. Legal Proceedings.
26
. Organization and Qualification
26
. Capitalization
26
. Financial Information
27
. Absence of Undisclosed Liabilities
28
. Taxes.
28
. Employee Benefits.
29
. Permits
30
. Intellectual Property
31
. Labor
32
. Contracts
33
. Absence of Changes
36
. Compliance with Laws
37
. Assets Under Management; Investment Advisory Activities.
38
. ETF Funds
40
. Property
45
. [Intentionally Omitted]
45
. Sufficiency of Assets.
45
. Finders’ Fees
46

i
    
Exhibit 10.2


. Insurance
46
. Affiliate Arrangements
46
. Filings
46
. No Other Representations
46
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
. Organization and Qualification
47
. Corporate Authorization
47
. Consents and Approvals
47
. Non-Contravention
48
. Binding Effect
48
. Financial Capability
49
. Investment Purpose
49
. Information in Proxy and Consent Solicitation Materials
49
. Section 15(f) of the Investment Company Act
50
. Filings
50
. Compliance with Laws
50
. Finders’ Fees
50
. Legal Proceedings
51
. No Other Representations
51
ARTICLE 5
COVENANTS OF SELLER
. Conduct of the ETFs Business.
51
. Access to Information
56
. Non-Solicitation of Alternative Transactions.
57
. Resignations
58
. Non-Solicit; Non-Competition
58
U.S. Person Certificate .
59
Trademarks; Tradenames .
59
Credit Documents
59
ARTICLE 6
COVENANTS OF BUYER
. Access to Information
59
. Trademarks; Tradenames
60
ARTICLE 7
COVENANTS OF BUYER AND SELLER
. Reasonable Best Efforts; Further Assurances
61
. Certain Filings
62
. Public Announcements
62
. Intercompany Accounts and Agreements
62

ii
    
Exhibit 10.2

ETF Fund Consents.
63
. Section 15(f)
66
. Certain Post-Closing Filings
67
. Notices of Certain Events
67
. WARN Act
68
. Confidentiality.
68
Restructuring
70
Section 7.12 . Pro-Ration     70
ARTICLE 8
TAX MATTERS
Allocation of Taxes
71
Straddle Period
71
Apportioned Obligations
72
Transfer Taxes
72
Cooperation on Tax Matters
73
Post-Closing Actions
73
Termination of Tax Sharing Agreements
73
ARTICLE 9
EMPLOYEE MATTERS AND BENEFITS
ETFs Business Employees .
73
Employee Matters .
75
. No Amendment; No Third-Party Beneficiaries
77
ARTICLE 10
CONDITIONS TO CLOSING
. Conditions to Obligations of Buyer and Seller
78
. Conditions to Obligation of Buyer
78
. Conditions to Obligation of Seller
79
ARTICLE 11
SURVIVAL; INDEMNIFICATION
. Survival
80
. Indemnification.
81
. Third Party Claim Procedures.
83
. Tax Contest .
84
. Direct Claim Procedures
84
. Calculation of Damages
85
. Assignment of Claims
85
. Exclusivity
86


iii
    
Exhibit 10.2

ARTICLE 12
TERMINATION
. Grounds for Termination
86
. Effect of Termination
87
ARTICLE 13
MISCELLANEOUS
. Notices
87
. Amendments and Waivers
88
. Expenses
88
. Successors and Assigns
89
. Governing Law
89
. Jurisdiction
89
. WAIVER OF JURY TRIAL
90
. Counterparts; Effectiveness; Third Party Beneficiaries
90
. Entire Agreement
90
. Severability
90
. Disclosure Schedules
91
. Specific Performance
91

TABLE OF EXHIBITS

Exhibit A    Form of Transition Services Agreement
Exhibit B    Base Revenue Schedule
Exhibit C    Form of Index Data Agreement
Exhibit D    Form of Fund Reorganization Agreement


iv
    
Exhibit 10.2

TRANSACTION AGREEMENT
TRANSACTION AGREEMENT (this “ Agreement ”) dated as of September 28, 2017 between Invesco Ltd., a Bermuda corporation (“ Buyer ”), and Guggenheim Capital, LLC, a Delaware limited liability company (“ Seller ”).
W I T N E S S E T H :
WHEREAS, Seller and certain of its wholly-owned Subsidiaries are engaged in the business of creating, distributing, operating, sponsoring and advising the ETF Funds and of creating, publishing, managing and disseminating the proprietary indexes utilized by the ETF Funds or under development (or developed but not commercialized) as of the Closing Date (as conducted as of the date hereof and as of the Closing Date, the “ ETFs Business ”);
WHEREAS, certain of Seller’s wholly-owned Subsidiaries are the record and beneficial owners of 100% of the issued and outstanding membership interests (the “ Membership Interests ”) of Accretive Asset Management, LLC, a Washington limited liability company, and Guggenheim Specialized Products, LLC, a Delaware limited liability company (together, the “ Transferred Entities ”), which are engaged in the ETFs Business; and
WHEREAS, Seller desires to cause such Subsidiaries to sell, and Buyer desires to purchase from such Subsidiaries of Seller, 100% of the outstanding Membership Interests, together with the other assets primarily used in or relating to the ETFs Business (which will be contributed to the Transferred Entities pursuant to the Restructuring), upon the terms and subject to the conditions hereinafter set forth;
ACCORDINGLY, in consideration of the promises and of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01.      Definitions. (a) As used herein, the following terms have the following meanings:
“ 40 Act ETF Funds ” means the ETF Funds other than the CurrencyShares Funds.
“ Adjusted Assets Under Management ” as of any date means the sum, for any ETF Fund in question as of such date, of the amount, expressed in U.S. dollars, of assets under management for each such ETF Fund as of such date valued as follows:

5
    
Exhibit 10.2

(a)    for purposes of calculating the Base Revenue Run-Rate as of the Base Date, in the same manner as provided for the calculation of base investment management fees payable in respect of each such ETF Fund pursuant to the terms of the Existing ETF Contracts applicable to such ETF Fund; and
(b)    for purposes of calculating the Closing Revenue Run-Rate as of the Closing Measurement Date, as of the Closing Date or as of the BulletShares ETF Measurement Date, as applicable, as the amount calculated pursuant to subsection (a) above, (i) increased by a positive amount equal to additions, contributions and reinvestments actually funded to such ETF Fund (including any ETF Fund launched after the Base Date) after the Base Date and on or prior to the Closing Measurement Date, the Closing Date or the BulletShares ETF Measurement Date, as applicable, (ii) decreased by terminations, withdrawals, redemptions and repurchases actually funded out of each such ETF Fund after the Base Date and prior to the Closing Measurement Date, the Closing Date or the BulletShares ETF Measurement Date, as applicable, and (iii) decreased by the amount of any Contingent Account; provided , however , in the case of both clauses (a) and (b) hereof (other than clauses (D), (E) and (F) below, which shall relate solely to clause (b)):
(A)
additions, contributions and reinvestments shall be taken into account only when actually funded and withdrawals, redemptions and repurchases shall be taken into account when they are actually funded out of such ETF Fund;
(B)
any assets under management for any ETF Fund for which the ETFs Business acts as investment adviser, sub-adviser, sponsor, manager or other similar capacity shall be counted only once;
(C)
any assets under management for any set of ETF Funds one of which invests in the other shall be counted only once if the ETFs Business acts as investment adviser to both, except to the extent that an investment management fee is payable to the ETFs Business in respect of each such multiple ETF Funds and including such amount is required to reflect revenues generated by the ETFs Business and does not result in double-counting;
(D)
to the extent any addition, contribution, reinvestment, withdrawal, redemption or repurchase after the Base Date is made in a currency other than U.S. dollars, for purposes of clause (b) hereof, such amount shall be converted to U.S. dollars at the currency exchange rate on the date of any such contribution, reinvestment, withdrawal, redemption or repurchase;

6
    
Exhibit 10.2

(E)
for the avoidance of doubt, the calculation of Adjusted Assets Under Management shall be made in a manner that excludes any increase or decrease in assets under management resulting from market appreciation or depreciation or currency fluctuations (except to the extent covered by clause (D) above) from and after the Base Date (or in the case of an ETF Fund established after the Base Date, from and after the date such ETF Fund is established); and
(F)
in the event of a Fund Change Announcement in respect of any ETF Fund, then Adjusted Assets Under Management for any such ETF Fund shall be deemed to be fixed at the amount thereof immediately prior to any such announcement rather than as of the Closing Measurement Date or Closing Date; provided, further, that in the event of a Fund Change Announcement in respect of any BulletShares-branded ETF Fund, the parties will reasonably agree on the manner for calculating Adjusted Assets Under Management and Closing Revenue Run-Rate that equitably gives effect to the economic arrangements contemplated by the second proviso of ‎Section 2.04(a).
“ Adjustment Factor ” means an amount equal to the Base Purchase Price divided by the Base Revenue Run-Rate.
“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person. Notwithstanding anything in this Agreement to the contrary, in no event shall any ETF Fund of, or managed by, any Person be considered to be an Affiliate of such Person.
“ Ancillary Agreement ” means each of the Transition Services Agreement and the Index Data Agreement.
“ Antitrust Laws ” mean all Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.
“ Assignment Requirements ” means, with respect to any Existing ETF Contract, the necessary consents and approvals (if any) under applicable Law and under such Existing ETF Contract to (i) in the case of a 40 Act ETF Fund, effect a Fund Merger or (ii) in the case of a CurrencyShares Fund, allow a CurrencyShares Sponsor Continuation to occur, in each case as contemplated by ‎Section 7.05, and, with respect to any Existing ETF Contract for an ETF Fund that licenses the right to use an index from a third party licensor where the assignment of such license requires the consent of such licensor, the consent of

7
    
Exhibit 10.2

such licensor to the assignment of the applicable index license agreement to a Transferred Entity, Buyer or its applicable Subsidiary, effective not later than the consummation of the Closing, or entry into a reasonably satisfactory replacement agreement with Buyer or its applicable Subsidiary, in each case on substantially the same economic terms in effect on the date hereof or, in the case of any ETF Fund launched after the Base Date, as of immediately prior to the Closing Date.
“ Base Date ” means September 8, 2017.
“ Base Purchase Price ” means $1,200,000,000, in cash .
“ Base Revenue Run-Rate ” means the Revenue Run-Rate for all ETF Funds calculated as of the Base Date, as set forth on the Base Revenue Schedule.
“ Benefit and Compensation Arrangement ” means any employment (or form of employment), benefit and compensation agreement (including compensation guarantees), plan, Contract, program, arrangement or policy covering one or more (i) ETFs Business Employees or (ii) former employees of the ETFs Business (to the extent there is a current or future obligation to such former employee under such benefit and compensation arrangement for which a Transferred Entity is responsible or has any liability, contingent or otherwise), including any trust instruments and insurance Contracts forming a part thereof and any deferred compensation, stock purchase, equity or equity-based or other incentive, bonus, consulting, post-retirement insurance, workers’ compensation, disability, fringe or other benefit, vacation or severance or change in control agreement, plan, Contract, program, arrangement or policy, including any “employee benefit plan” within the meaning of Section 3(3) of ERISA.
“ BulletShares ETF Measurement Date ” means the later of (i) the Closing Date and (ii) March 31, 2018.
“ Business Day ” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by applicable Law to close.
“ Buyer Disclosure Schedule ” means the disclosure schedule dated the date hereof regarding this Agreement that has been provided by Buyer to Seller prior to execution of this Agreement.
“ Buyer Fund ” means each investment company registered under the Investment Company Act and listed on Section 1.01(a) of the Buyer Disclosure Schedule.
“ Buyer Fund Series ” means the newly created “shell fund” series of a Buyer Fund with which the 40 Act ETF Funds are proposed to consummate Fund Mergers pursuant to the Assignment Requirements.

8
    
Exhibit 10.2

“ Buyer Material Adverse Effect ” means a material adverse effect on Buyer’s ability to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement, in each case, in a timely manner.
“ Closing Date ” means the date of the Closing.
“ Closing Measurement Date ” means such Business Day as close as practicable but in any event not more than 10 Business Days nor less than 5 Business Days prior to the date of the Closing, as notified by Seller to Buyer on or after the date hereof.
“ Closing Revenue Run-Rate ” means the Revenue Run-Rate for all ETF Funds calculated in accordance with clause (b) of the definition of Adjusted Assets Under Management as of the Closing Measurement Date or, for purposes of ‎Section 2.04 (other than the second proviso of Section 2.04(a)), as of the Closing Date, or, for purposes of the second proviso of Section 2.04(a), as of the BulletShares ETF Measurement Date.
“ Closing Revenue Run-Rate Purchase Price Reduction ”, if any, means the product of (x) the Adjustment Factor multiplied by (y) the excess, if any, of (i) 0.925 multiplied by the Base Revenue Run-Rate over (ii) the Closing Revenue Run-Rate.
“ Code ” means the United States Internal Revenue Code of 1986.
“ Confidentiality Agreement ” means the Confidentiality Agreement between Buyer and Guggenheim Partners, LLC dated as of March 2, 2017.
“ Contingent Account ” as of any date means any ETF Fund that has not satisfied any Assignment Requirement applicable to such ETF Fund as of such date; provided that, in the event of a Fund Change Announcement in respect of any ETF Fund, then the applicable ETF Fund shall be deemed not to be a Contingent Account (and the Assignment Requirement for such ETF Fund shall be deemed to have been satisfied) at and after any such announcement.
“ Contract ” means, any agreement, undertaking, lease, sublease, license, sublicense, contract, note, mortgage, indenture, power of attorney, guarantee, arrangement, commitment or other binding obligation, whether oral or written, express or implied, in each case as amended, supplemented, waived or otherwise modified.
“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise (and “ Controlled ” and “ Controlling ” shall have a correlative meaning). For purposes of this definition, a general partner or managing member of a Person shall always be considered to Control such Person.

9
    
Exhibit 10.2

“ CurrencyShares Fund ” means each CurrencyShares exchange traded fund (A) listed in the Base Revenue Schedule or (B) sponsored and launched by the ETFs Business between the date hereof and the Closing Date.
“ CurrencyShares Sponsor Continuation ” means, with respect to any CurrencyShares Fund, the continuation, immediately following the Closing, of Guggenheim Specialized Products, LLC as “Sponsor” of such CurrencyShares Fund under the Depositary Trust Agreement applicable to such CurrencyShares Fund.
“ Encumbrances ” means any lien, pledge, debt, charge, claim, encumbrance, security interest, option, mortgage, assessment, easement or any other similar restriction or limitation of any kind.
“ ERISA ” means the Employee Retirement Income Security Act of 1974.
“ ERISA Affiliate ” shall mean, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the first entity, trade or business, or that is, or was at the relevant time, a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
“ ETF Fund ” means (i) each exchange traded fund registered under the Investment Company Act and (A) listed in the Base Revenue Schedule or (B) sponsored and launched by the ETFs Business between the date hereof and the Closing Date and (ii) each CurrencyShares Fund.
“ ETF Fund Board ” means, with respect to any 40 Act ETF Fund, the board of directors or trustees thereof.
“ ETFs Business Employees ” means (i) those employees of Seller and its Subsidiaries set forth on ‎Section 3.13(a) of the Seller Disclosure Schedule, as mutually agreed by Seller and Buyer, and (ii) those employees of Seller and its Subsidiaries identified by Buyer in writing to Seller within 60 days of the date hereof who provide services to the BulletShares-branded ETF Funds or are otherwise critical to the ETF Business, which employees shall be added to Section 3.13(e) of the Seller Disclosure Schedule as contemplated by Section 9.01(c). For the avoidance of doubt, no employees under clause (ii) will be fixed income investment personnel.
“ ETFs Business Material Adverse Effect ” means a material adverse effect on (i) the condition (financial or otherwise), business, assets or results of operations of the ETFs Business, taken as a whole, excluding any effect to the extent resulting from (A) any change after the date hereof in Law or accounting standards; (B) any change arising after the date hereof in economic, governmental, political or business conditions locally or globally generally; (C)

10
    
Exhibit 10.2

any events, conditions or trends in economic, business or financial conditions generally affecting the investment management industry and arising after the date hereof, including changes occurring after the date hereof in prevailing interest rates, currency exchange rates and price levels or trading volumes in the United States or foreign securities markets; (D) any change in assets under management resulting from market changes in asset valuation or market price fluctuations generally; (E) acts of war, sabotage or terrorism or natural disasters occurring after the date hereof; (F) the effects of the actions that are (1) expressly and specifically required by this Agreement, (2) taken by Seller or its Subsidiaries in respect of the ETFs Business with the prior written consent of the other party hereto or (3) not taken by Seller or its Subsidiaries in respect of the ETFs Business at the written request of Buyer or due to Buyer’s refusal to provide its consent therefor if such consent was required hereunder; (G) the announcement or, other than in the case of any matter relating to requirements under Contracts or Law, consummation of the transactions contemplated by this Agreement; or (H) the reduction in the management fee for the Guggenheim S&P 500 Equal Weight ETF announced in June 2017 and the consequences of such reduction and announcement but, in the case of the foregoing clauses (A), (B), (C) and (E), only to the extent that the ETFs Business, taken as a whole, is not disproportionately adversely affected compared to other asset managers and providers of investment management products generally taking into account the relative mix of businesses of the ETFs Business, on the one hand, and such other managers and providers, on the other hand; or (ii) Seller’s or its Subsidiaries’, in respect of the ETFs Business, ability to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement, in each case, in a timely manner.
“ Exchange Act ” means the United States Securities Exchange Act of 1934.
“ Excluded Fund Change Announcement ” means any public announcement by (x) Buyer (or, after Closing, by any ETF Fund) or (y) before Closing, any ETF Fund to the extent described in clause (iii) of the definition of Fund Change Announcement, in each case, of any intention or proposal relating to (i) any Fund Merger contemplated by ‎Section 7.05, (ii) any CurrencyShare Fund Assignment contemplated by ‎Section 7.05, or (iii) any re-branding of any ETF Fund to reflect the transactions contemplated hereby (including to add references to Invesco and/or PowerShares and to remove references to Guggenheim or Rydex) as may be further described on ‎Section 1.01(a) of the Buyer Disclosure Schedule.
“ Existing ETF Contract ” means any existing investment advisory, sponsorship or similar Contract that the ETFs Business has with any ETF Fund (including the Depositary Trust Agreements in the case of the CurrencyShares Funds) as of the Closing or the date of this Agreement, as applicable.

11
    
Exhibit 10.2

“ Form of Fund Reorganization Agreement ” means an Agreement and Plan of Reorganization in a form to be agreed; attached hereto as Exhibit D is a draft form under negotiation.
“ Fund Change Announcement ” means, other than an Excluded Fund Change Announcement, (i) any public announcement (whether before or after Closing, but prior to the date after which any applicable Assignment Requirement cannot be obtained prior to the end of the True-Up Period in accordance with the terms of the applicable Existing ETF Contract or applicable law) by Buyer (or, after Closing, by any ETF Fund) of any intention or proposal with respect to any ETF Fund to effect any merger or closure of such ETF Fund, (ii) in respect of any ETF Fund branded “Guggenheim”, “Rydex”, “CurrencyShares” or “BulletShares” or any derivative thereof, any public announcement (whether before or after Closing) by Buyer (or, after Closing, by any ETF Fund) of any re-branding of the name of that ETF Fund, or (iii) any announcement by any ETF Fund of any intention or proposal of Buyer to effect any of the changes described in any of the immediately preceding clauses (i) or (ii), which is announced during the respective time periods set forth in such immediately preceding clauses, but, in the case of this clause (iii), only to the extent that such intentions or proposals may be reasonably concluded to be required by Law to be disclosed in any filings required to be made by such ETF Fund under the Investment Company Act, the Exchange Act or the Securities Act and subject to confirmation by Buyer regarding the accuracy of the description thereof .
“ Fund Merger ” means, with respect to each 40 Act ETF Fund, the merger or reorganization of such 40 Act ETF Fund with and into the respective Buyer Fund Series set forth on ‎Section 1.01(a) of the Buyer Disclosure Schedule pursuant to an agreement and plan of reorganization substantially similar to the Form of Fund Reorganization Agreement, it being understood and agreed that as a result of such merger or reorganization, (i) the board of trustees of such surviving Buyer Fund Series shall consist of the members of the board of trustees of such Buyer Fund immediately prior to such merger or reorganization, and (ii) such surviving Buyer Fund Series shall become (or shall already be) party to a New ETF Contract with a Subsidiary of Buyer, such New ETF Contract to be on terms substantially comparable (but having the same advisory fee and same aggregate non-advisory fees) to those of such ETF Fund’s Existing ETF Contract as in effect on the date hereof.
“ GAAP ” means generally accepted accounting principles in the United States as of the applicable reference date.
“ Government Entity ” means any foreign or domestic, federal, state, provincial, county, city or local legislative, administrative or regulatory authority, agency, court, arbitrator or arbitration panel, body or other governmental or quasi-governmental entity with competent jurisdiction, including any Self-Regulatory Organization and any such supranational body.

12
    
Exhibit 10.2

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“ Indebtedness ” means, with respect to any Person, without duplication, any of the following liabilities, whether secured (with or without limited recourse) or unsecured, contingent or otherwise: (i) all liabilities for borrowed money; (ii) all liabilities evidenced by bonds, debentures, notes or other similar instruments or under financing or capital leases; (iii) all liabilities for guarantees of another Person in respect of liabilities of the type set forth in clauses (i) and (ii); and (iv) all liabilities for accrued but unpaid interest expense and unpaid penalties, fees, charges and prepayment premiums that are payable, in each case, with respect to any of the obligations of a type described in clauses (i) through (iii) above.
“ Index Data Agreement ” means the Index Data Agreement between Seller (or a Subsidiary of Seller) and Buyer (or a Subsidiary of Buyer), substantially in the form attached hereto as Exhibit C.
“ Intellectual Property Rights ” means all: (i) trademarks, service marks, domain names, logos, trade dress, and trade names, all applications and registrations for the foregoing, in any jurisdiction, and all goodwill associated therewith (collectively “ Trademarks ”); (ii) patents and patent applications registered or applied for in any jurisdiction (collectively “ Patents ”); (iii) trade secrets, confidential proprietary information, inventions and know-how (collectively, “ Trade Secrets ”); (iv) works of authorship and copyrights therein and thereto (including in software), and all registrations and applications therefor (collectively, “ Copyrights ”); and (v) any other similar type of proprietary intellectual property right to the extent entitled to legal protection as such.
“ Internal Revenue Service ” or “ IRS ” means the Internal Revenue Service of the United States of America.
“ Investment Advisers Act ” means the United States Investment Advisers Act of 1940.
“ Investment Company Act ” means the United States Investment Company Act of 1940.
“ Knowledge ” means (i) when used with respect to Seller, the actual knowledge of the individuals listed on ‎Section 1.01(a) of the Seller Disclosure Schedule following reasonable inquiry under the circumstances (but without any obligation to notify any particular individuals of the transactions contemplated by this Agreement prior to the date hereof) and (ii) when used with respect to Buyer, the actual knowledge of the individuals listed on ‎Section 1.01(a) of the Buyer Disclosure Schedule following reasonable inquiry under the circumstances (but without any obligation to notify any particular individuals of the transactions contemplated by this Agreement prior to the date hereof).

13
    
Exhibit 10.2

“ Law ” means, with respect to any Person, any foreign, federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Government Entity that is binding upon or applicable to such Person or its properties or business, as amended unless expressly specified otherwise.
“ Legal Proceeding ” means any judicial, legal, administrative, arbitral or other action, suit or other proceedings of any nature by or before any Government Entity.
“ Maturing ETFs ” means the Guggenheim BulletShares 2017 Corporate Bond ETF and the Guggenheim BulletShares 2017 High Yield Corporate Bond ETF.
“ Net Assets ” means, with respect to an ETF Fund, the sum of the assets of such ETF Fund minus its liabilities.
“ New ETF Contract ” means, if required under applicable Law or the terms of the Existing ETF Contract applicable thereto, with respect to an ETF Fund, a new investment advisory, sponsorship or similar agreement with the ETF Fund (or Buyer Fund Series that is the successor thereto) (i) to be entered into as a result of the transactions contemplated by this Agreement pursuant to the Assignment Requirements and (ii) in the case of the 40 Act ETF Funds, approved in accordance with the requirements of Section 15 of the Investment Company Act (as such requirements may be modified by applicable Law, including any effective and applicable exemptive order issued by the SEC) excluding any “interim” new advisory contract (either advisory or sub-advisory) approved in reliance on Rule 15a-4 under the Investment Company Act.
“ Non-Assumed Infrastructure Contract ” means any Contract to which Seller or any of its Affiliates is a party or otherwise bound that relates to back office, information technology or other infrastructure used in connection with the ETFs Business and for which Buyer and its Subsidiaries (including, following the Closing, the Transferred Entities) will not have any obligation or liability.
“ NYSE ” means the New York Stock Exchange.
“ Organizational Documents ” means (i) with respect to any Person that is a corporation, its articles or certificate of incorporation or memorandum and articles of association, as the case may be, and bylaws, (ii) with respect to any Person that is a partnership, its certificate of partnership and partnership agreement, (iii) with respect to any Person that is a limited liability company, its certificate of formation and limited liability company or operating agreement, (iv) with respect to any Person that is a trust or other entity, its declaration or agreement of trust or other constituent document, and (v) with respect to any other Person, its comparable organizational documents, in each case, as has been amended or restated.

14
    
Exhibit 10.2

“ Other ETFs Business Records ” means (i) all books and records, whether in hard copy or computer format, of Seller or its Subsidiaries (other than the Transferred Entities) that are used primarily or maintained primarily in connection with the ETFs Business, and (ii) all books and records (A) that are investment account records of, or that are required to be maintained and retained under the Investment Company Act or the Investment Advisers Act by Seller or its Subsidiaries in connection with the provision of investment advisory and related services to the ETF Funds, or (B) that are in the possession and control of Seller or its Subsidiaries or reasonably available to them and were used to support a claim by Seller and its Subsidiaries of GIPS compliance for an account that the ETFs Business includes in a Composite (and with respect to which accounts shall include the books and records necessary to demonstrate the calculation of such performance track records and otherwise to use the same in accordance with applicable Laws).
“ Owned Intellectual Property Rights ” means all Intellectual Property Rights owned by any of the Transferred Entities or owned by Seller or its Subsidiaries and used primarily in the ETFs Business.
“ Permit ” means all licenses, franchises, permits, certificates, registrations, orders, concessions, declarations, and other authorizations and approvals that are issued by or obtained from any Government Entity.
“ Permitted Encumbrance ” means: (i) Encumbrances specifically reflected or reserved against or otherwise specifically disclosed in the Balance Sheet; (ii) mechanics’, materialmen’s, warehousemen’s, carriers’, workers’, or repairmen’s liens or other similar common law or statutory Encumbrances arising or incurred in the ordinary course of business consistent with past practice for sums not yet due and payable that are not, individually or in the aggregate with all other Permitted Encumbrances, material in respect of the ETFs Business, taken as a whole; (iii) statutory liens for Taxes, assessments and other governmental charges not yet due and payable or being contested in good faith by appropriate proceedings and for which adequate reserves have been established on the Balance Sheet; and (iv) other Encumbrances incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date that are not, individually or in the aggregate with all other Permitted Encumbrances, material in respect of the ETFs Business, taken as a whole.
“ Person ” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Government Entity.




15
    
Exhibit 10.2

“ Post-Closing Tax Period ” means any Tax period beginning after the Closing Date; and, with respect to a Tax period that begins on or before the Closing Date and ends thereafter, the portion of such Tax period beginning after the Closing Date.
“ Pre-Closing Tax Period ” means any Tax period ending on or before the Closing Date; and, with respect to a Tax period that begins on or before the Closing Date and ends thereafter, the portion of such Tax period ending on the Closing Date.
“ Pro Rata Expense Accrual ” means the Bonus Accrual, but only to the extent that the related Transferred Employee Bonus Amounts were not made prior to the Closing; provided that the payment of all Bonus Amounts that may be made prior to the Closing shall be made in the ordinary course of business consistent with past practice, including the payment dates thereof.
“ Restructuring ” means the actions contemplated by Section 7.11.
“ Revenue Run-Rate ” means, as of any specified date, the aggregate amount, without duplication, of all investment advisory, sub-advisory, administrative and other management fees for each ETF Fund payable to the ETFs Business pursuant to the relevant Existing ETF Contract, determined by multiplying the Adjusted Assets Under Management for each such ETF Fund at such date by the applicable stated annual fee rate for all such fees for such ETF Fund in effect on such date. The calculation of the Revenue Run-Rate shall:
(a)    exclude (i) from revenue any performance-based, incentive, contingent or similar fees, securities lending fees and transaction revenues and (ii) the impact on fees of any increase or decrease in assets under management resulting from market appreciation or depreciation or currency fluctuation (except to the extent provided in clause (D) of Adjusted Assets under Management) from and after the Base Date (or in the case of an ETF Fund established after the Base Date, after the date such ETF Fund is established);
(b)    include only revenues to the ETFs Business after giving effect to, and taking into account, any fee or expense waiver, rebate or cap, reimbursement obligation or similar offset, any amounts payable to a sub-adviser that is not a part of the ETFs Business (including any such amount deducted directly by or on behalf of an ETF Fund from the fee otherwise payable by such ETF Fund to the ETFs Business under the applicable Existing ETF Contract), and any amounts payable in respect of revenue sharing and licensing arrangements (other than license fees to the extent actually born by the applicable ETF Fund) relating to the ETF Funds; and
(c)    with respect to any Fund Change Announcement, assume that the fee rate for the applicable ETF Fund was fixed at the amount thereof prior to the Fund Change Announcement.

16
    
Exhibit 10.2

“ SEC ” means the United States Securities and Exchange Commission.
“ Securities Act ” means the United States Securities Act of 1933.
“ Seller Disclosure Schedule ” means the disclosure schedule dated the date hereof regarding this Agreement that has been provided by Seller to Buyer prior to the execution of this Agreement.
“ Straddle Period ” means any Tax year or period beginning on or before the Closing Date and ending after the Closing Date.
“ Subsidiary ” means, with respect to any Person, any entity (i) of which such Person or a subsidiary of such Person is a general partner, managing member or the like or (ii) of which at least a majority of the securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions with respect to such entity are at the time directly or indirectly owned by such Person and/or one or more of its Subsidiaries. Notwithstanding anything in this Agreement to the contrary, in no event shall any ETF Fund of, or managed by, any Person be considered to be a Subsidiary of such Person.
“ Tax ” means (i) any tax or other like assessment or charge of any kind whatsoever (including, but not limited to, withholding on amounts paid to or by any Person), together with any interest, penalty, addition to tax or additional amount imposed by any governmental authority (domestic or foreign) responsible for the imposition of any such tax (a “ Taxing Authority ”) and (ii) with respect to any Transferred Entity, any liability for the payment of any amount of the type described in the immediately preceding clause (i) as a result of any Transferred Entity being a member of an affiliated, consolidated, combined or unitary group with any other entity at any time on or prior to the Closing Date.
“ Tax Returns ” means all reports, returns, information returns, elections, agreements, declarations, or other documents of any nature or kind (including any attached schedules, supplements and additional or supporting material) filed or required to be filed with respect to Taxes, including any claim for refund, amended return or declaration of estimated Taxes (and including any amendments with respect thereto).
“ Transferred Entity Records ” means all books and records, whether in hard copy or computer format, of any Transferred Entity.
“ Transition Services Agreement ” means the Transition Services Agreement between Seller (or a Subsidiary of Seller) and Buyer (or a Subsidiary of Buyer), substantially in the form attached hereto as Exhibit A.
“ True-Up Period ” means the period beginning on the Closing Date and concluding on the date that is 180 days after the Closing Date.

17
    
Exhibit 10.2

(b)      Each of the following terms is defined in the Section set forth opposite such term:
Term
Section
Accounting Referee
2.05
Affiliate Arrangement
3.27
Agreement
Preamble
Allocation Statement
2.05
Apportioned Obligations
8.03
Assigned Contracts
3.17(c)
Balance Sheets
3.10(a)
Balance Sheet Date
3.10(a)
Base Revenue Schedule
3.20(a)
Bonus Accrual
9.02(b)
Bonus Amount
9.02(b)
Buyer
Preamble
Buyer Indemnified Parties
11.02(a)
Buyer Required Approvals
4.03
Cap
11.02(a)(i)(C)
Closing
2.02(a)
Closing Purchase Price
2.01
Closing Revenue Run-Rate Purchase Price Adjustment
2.03(b)
Closing Year Bonus Accrual
9.02(b)
Closing Year Bonus Amounts
9.02(b)
Composites
3.20(e)
Covered Subsidiary
3.01
Damages
11.02(a)
De Minimis Amount
11.02(a)(i)(A)
Deductible
11.02(a)(i)(B)
Equity Rights
3.09(b)
ETF Fund Financial Report
3.21(d)(ii)
ETFs Business
Recitals
ETFs Business Employee Information List
3.13(e)
Fund Financial Statements
3.21(d)(i)
Fund Merger Proxy Statement Prospectus
7.05(b)(ii)
Fundamental Representations
11.01
Identified Business Employee
9.01(a)
Indemnified Party
11.03(a)
Indemnifying Party
11.03(a)
Long-Stop Date
12.01(b)
Material IP Contracts
3.15(b)
Membership Interests
Recitals
Net Revenue Schedule
3.10(a)
Non-Transferred Business Employee
9.01(a)
Patents
1.01(a)
Potential Contributor
11.07
Prior Year Bonus Accrual
9.02(b)

18
    
Exhibit 10.2

Term
Section
Process Agent
13.06(b)
Prospectus
3.21(e)
PTE 84-14
3.21(m)
Prior Year Bonus Amounts
9.02(b)
Retained Employee
9.01(d)
Reports
3.21(e)
Seller
Preamble
Seller Indemnified Parties
11.02(b)
Seller Marks
6.02
Seller Required Approvals
3.05
Severance Benefits
9.01(d)
Shared Severance Window
9.01(d)
Specified Contracts
3.17(b)
Specified ETFs Contract
3.17(b)
Specified Transferred Entity Contracts
3.17(a)
Taxing Authority
1.01(a)
Third Party Claim
11.03(a)
Trademark Transition Period
6.02
Trademarks
1.01(a)
Trade Secrets
1.01(a)
Transaction Severance Policy
9.01(d)
Transfer Date
9.01(b)
Transferred Employee
9.01(a)
Transferred Entities
Recitals
Transfer Taxes
8.04
Warranty Breach
11.02(a)(i)

Section 1.02.      Other Definitional and Interpretative Provisions. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract

19
    
Exhibit 10.2

as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; provided that with respect to any agreement or contract listed on any Schedules hereto, all such amendments, modifications or supplements must also exist prior to the date hereof and be listed in the appropriate Schedule. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to “law”, “laws” or to a particular statute or law shall be deemed also to include any and all applicable Law (including, for the sake of clarity, the rules and regulations thereunder), as amended.
ARTICLE 2     
PURCHASE AND SALE
Section 2.01 . Purchase and Sale. Upon the terms and subject to the conditions of this Agreement, Seller agrees to cause one or more of its Subsidiaries to sell to Buyer, and Buyer agrees to purchase from such Subsidiaries of Seller, the Membership Interests at the Closing, free and clear of any Encumbrances. The aggregate purchase price for the Membership Interests and other transactions contemplated hereby at the Closing shall be the Base Purchase Price minus the Closing Revenue Run-Rate Purchase Price Adjustment minus the Pro Rata Expense Accrual (the “ Closing Purchase Price ”). The Closing Purchase Price shall be paid as provided in ‎Section 2.02(b), and shall be subject to adjustment as provided in Section ‎2.04.
Section 2.02 . Closing. (a) The closing (the “ Closing ”) of the purchase and sale of the Membership Interests hereunder shall take place by the electronic exchange of documents, on the last Business Day of the month in which the conditions set forth in ‎Article 10 (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permissible, waiver of those conditions at the Closing) have been satisfied or, to the extent permissible, waived by the party or parties entitled to the benefit of such conditions, or at such other time or place as Buyer and Seller may agree.
(b)      At the Closing:
(i)      Buyer shall deliver to Seller (or any Subsidiaries of Seller designated by Seller) the Closing Purchase Price in immediately available funds by wire transfer to an account of Seller (or its applicable Subsidiary) designated by Seller, by notice to Buyer, which notice shall be delivered not later than two Business Days prior to the Closing Date;
(ii)      Seller shall cause one or more of its Subsidiaries to deliver to Buyer the Membership Interests (including appropriate evidence of ownership thereof that is reasonably acceptable to Buyer, registered in the name of Buyer or its designee(s)), free and clear of any Encumbrances;

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Exhibit 10.2

(iii)      Seller shall, or shall cause one or more of its Subsidiaries to, deliver to Buyer the Transferred Entity Records and the Other ETFs Business Records; provided that, for the avoidance of doubt, Seller and its Subsidiaries shall (A) be permitted to retain copies of the Transferred Entity Records and the Other ETFs Business Records to the extent required by applicable Laws, regulation or internal compliance policies, (B) be permitted to retain copies of Other ETFs Business Records to the extent relating to or otherwise used in connection with businesses other than the ETFs Business and (C) retain a non-exclusive right (1) to continue to use following the Closing the performance track records of the ETF Funds, including the Composites, as of the Closing Date, including in marketing the investment advisory services and investment funds offered by Seller and its Subsidiaries, to the extent permitted by applicable Laws and Section ‎5.05(b) (determined without regard to the time period set forth therein) and (2) to retain copies of records of the ETFs Business as of the Closing Date necessary to demonstrate the calculation of such performance track records and otherwise to use such performance track records in accordance with applicable Laws;
(iv)      Seller and Buyer and their respective Subsidiaries that are a party thereto, if any, shall execute and deliver each of the Ancillary Agreements;
(v)      Seller shall deliver to Buyer the certificates referenced in ‎Section 10.02(c); and
(vi)      Buyer shall deliver to Seller the certificates referenced in ‎Section 10.03(c).
Section 2.03 . Closing Revenue Run-Rate Purchase Price Adjustment.
(a)      If the Closing Revenue Run-Rate is less than 0.925 multiplied by the Base Revenue Run-Rate, then the Purchase Price shall be reduced by an amount equal to the Closing Revenue Run-Rate Purchase Price Reduction.
(b)      Any adjustment resulting from the application of this ‎Section 2.03 is referred to in this Agreement as the “ Closing Revenue Run-Rate Purchase Price Adjustment ”.
Section 2.04 . True-Up. (a) Upon the expiration of the True-Up Period, the parties shall recalculate the Closing Revenue-Run Rate Purchase Price Adjustment as of the Closing Date; provided   that if any ETF Fund that was a Contingent Account on the Closing Measurement Date (i) has satisfied the applicable Assignment Requirements or (ii) is the subject of a Fund Change Announcement, in either case, not later than the final day of the True-Up Period then such ETF Fund shall not be treated as a Contingent Account for purposes of such recalculation and the Adjusted Assets Under Management as of the Closing Date for such ETF Fund shall be fully included in Closing Revenue Run-Rate for

21
    
Exhibit 10.2

purposes of such recalculation; provided, further , that the recalculation of the Closing Revenue-Run Rate Purchase Price Adjustment relating to each BulletShares-branded ETF Fund shall, as long as such BulletShares-branded ETF Fund has met the Assignment Requirements or any BulletShares-branded ETF Fund has been the subject of a Fund Change Announcement, be calculated as of the BulletShares ETF Measurement Date and regardless of whether such BulletShares-branded ETF Fund was a Contingent Account on the Closing Measurement Date.
(b)      If such recalculation yields:
(i)      a reduced Closing Revenue Run-Rate Purchase Price Reduction, then Buyer shall pay to Seller an amount that is equal to the amount of such reduction to the Closing Revenue Run-Rate Purchase Price Reduction as soon as is reasonably practicable after, but in any event within ten Business Days of, the date upon which the recalculation described in this ‎Section 2.04(b)(i) is made; or
(ii)      an increased Closing Revenue Run-Rate Purchase Price Reduction or an amount that would give rise for the first time to a Closing Revenue Run-Rate Purchase Price Reduction, then Seller shall pay to Buyer an amount that is equal to the amount of such increase to the Closing Revenue Run-Rate Purchase Price Reduction or the amount of the Closing Revenue Run-Rate Purchase Price Reduction (as applicable) as soon as is reasonably practicable after, but in any event within ten Business Days of, the date upon which the recalculation described in this ‎Section 2.04(b)(ii) is made.
(c)      Any amounts payable pursuant to this ‎Section 2.04 shall be payable in immediately available funds by wire transfer to an account of Buyer or Seller, as the case may be, with a bank designated by such receiving party.
(d)      For purposes of this ‎Section 2.04, all references to the Closing Measurement Date included in the definitions of Adjusted Assets Under Management and Closing Revenue Run-Rate shall be deemed references to the Closing Date.
Section 2.05. Purchase Price Allocation . As soon as practicable (but in any event within 90 days) after the Closing, Seller shall deliver to Buyer a statement (the “ Allocation Statement ”) allocating the consideration paid pursuant to this Agreement among the assets of the Transferred Entities and the certain other assets relating to the ETFs Business in accordance with Section 1060 of the Code, it being understood that amounts allocable to unrealized profit from transferred customer contracts, if any, shall not exceed an amount equal to the amount of such fees that have accrued sixty (60) days following the Closing less allocable expenses, and any excess amounts allocable to such transferred customer contracts shall be classified as “Class VI” or “Class VII” assets. If, within 30 days after the delivery of the Allocation Statement, Buyer notifies Seller

22
    
Exhibit 10.2

in writing that Buyer objects to the allocation set forth in the Allocation Statement, Seller and Buyer shall use commercially reasonable efforts to resolve such dispute within 30 days. In the event that Buyer and Seller are unable to resolve such dispute within 30 days, Buyer and Seller shall jointly cause independent accountants of nationally recognized standing reasonably satisfactory to Buyer and Seller (who shall not have any material relationship with Buyer, Seller or any of their respective Affiliates) (the “ Accounting Referee ”) promptly to resolve the disputed items. Upon resolution of the disputed items, the allocation reflected on the Allocation Statement shall be adjusted to reflect such resolution. The costs, fees and expenses of the Accounting Referee shall be borne equally by Buyer and Seller. No Party shall (or shall permit any Affiliate) to take a position on any Tax Return, before any Tax Authority or in any Tax Proceeding that is in any manner inconsistent with the Allocation Statement, unless specifically required pursuant to a determination by the applicable Taxing Authority. The Parties will promptly advise each other of the existence of any Tax audit, controversy or litigation related to any allocation hereunder.
ARTICLE 3     
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to ‎Section 13.11, except as set forth in the Seller Disclosure Schedule, Seller represents and warrants to Buyer as of the date of this Agreement and as of the Closing Date as follows:
Section 3.01 . Organization and Qualification. Seller and each of its Subsidiaries that owns Membership Interests or that provides advisory, index-related or other professional or similar services to the ETFs Business (any of the foregoing, a “ Covered Subsidiary ”) is a legal entity duly organized, validly existing and, to the extent such concept is relevant in the applicable jurisdiction, in good standing under the Laws of its jurisdiction of organization. To the extent relating to the ETFs Business or the ability of Seller to enter into or consummate the transactions contemplated hereby: (i) Seller and each of its Covered Subsidiaries has the requisite corporate or other similar power and authority to own or lease all of its properties and assets and to carry on its business as conducted as of the date of this Agreement and to own, lease and operate all of its properties and assets, in all material respects as conducted, owned, leased or operated as of the date of this Agreement; and (ii) Seller and each of the Covered Subsidiaries is duly qualified to do business in each jurisdiction in which the nature of its business or the character or location of the properties and assets owned, leased or operated by it makes such qualification necessary other than any failure to be so qualified that would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. Seller has made available to Buyer prior to the date of this Agreement complete and correct copies of the Organizational Documents of Seller as in effect as of the date of this Agreement. The ETFs Business is owned and operated by Seller and its Subsidiaries and not by any Affiliates of Seller other than the Subsidiaries of Guggenheim.

23
    
Exhibit 10.2

Section 3.02 . Ownership. Seller or one of its Subsidiaries is, and as of the Closing Date will be, the legal and beneficial owner of all of the issued and outstanding equity interests in the Transferred Entities, and at the Closing will deliver to Buyer good and valid title to the Membership Interests, free and clear of any Encumbrance. Seller has and will retain through and including the Closing such control and authority as may be required in order to cause its Subsidiaries to take the actions contemplated to be taken by all such Subsidiaries pursuant hereto.
Section 3.03 . Corporate Authority. Seller has (or any of its Subsidiaries who may be a party to any Ancillary Agreement has) full corporate power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it (or any such Subsidiary) is or will be a party and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereunder and thereunder. The execution, delivery and performance by Seller (or any such Subsidiary) of this Agreement and each of the Ancillary Agreements to which it is or will be a party, and each of the transactions contemplated hereunder and thereunder, have been duly and validly authorized and no additional corporate or shareholder authorization or consent is required in connection with the execution, delivery and performance by Seller (or any such Subsidiary) of this Agreement and each of the Ancillary Agreements to which it (or any such Subsidiary) is or will be a party or any of the transactions contemplated hereunder or thereunder.
Section 3.04 . Binding Effect. Assuming the due authorization, execution and delivery of this Agreement and the Ancillary Agreements by Buyer (or, in the case of the Ancillary Agreements, Buyer or a Subsidiary of Buyer), this Agreement constitutes, and each Ancillary Agreement when executed and delivered will constitute, a valid and legally binding obligation of Seller (or, in the case of the Ancillary Agreements, of Seller or a Subsidiary of Seller) enforceable against Seller or such Subsidiary in accordance with its terms, subject (in the case of enforceability) to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
Section 3.05 . Governmental Consents and Approvals. Other than in connection with (i) the HSR Act or any other Antitrust Laws, (ii) any applicable banking, securities or other financial services Laws of any banking commission or any securities or other financial services regulator, or (iii) such other Law, in each case of (i) through (iii) above, that is set forth on ‎Section 3.05 of the Seller Disclosure Schedule (the matters covered under clauses (i) through (iii) above, collectively, the “ Seller Required Approvals ”), Seller and its Affiliates (including the Transferred Entities) are not required to obtain any authorization, waiver, consent or approval of, make any filing or registration with, or give any notice to, any Government Entity or to obtain any Permit in connection with the execution, delivery and performance by Seller of this Agreement or the execution, delivery and performance by Seller or its Subsidiaries of each of the Ancillary Agreements to which Seller or any of its Subsidiaries is or will be a party or the

24
    
Exhibit 10.2

consummation by Seller or its Subsidiaries of any of the transactions contemplated hereunder or thereunder, other than any authorization, waiver, consent, approval, filing, registration, notice or Permit, the failure of which to obtain, make or give would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. As of the date hereof, Seller is not aware of any reason why any Seller Required Approvals will not be received in order to permit the consummation of the transactions contemplated hereby.
Section 3.06 . Non-Contravention. The execution, delivery and performance by Seller of this Agreement and by Seller and its Subsidiaries of each of the Ancillary Agreements to which Seller or any of its Subsidiaries (including the Transferred Entities) is or will be a party, and the consummation by Seller and its Subsidiaries (including the Transferred Entities) of the transactions contemplated hereunder and thereunder, do not and will not (i) conflict with or violate any provision of the Organizational Documents of Seller, any Subsidiary of Seller that owns Membership Interests, any Subsidiary that is a party to an Ancillary Agreement, any Transferred Entity, or any ETF Fund, (ii) assuming the receipt of all consents, approvals, waivers and authorizations and the making of the notices and filings referred to in ‎Section 3.05 or ‎Section 7.05, conflict with, or result in the breach of, or constitute a default under, or result in the termination, Encumbrance, cancellation, modification or acceleration of any right or obligation of Seller, any Covered Subsidiary, any Subsidiary that is a party to an Ancillary Agreement, any Transferred Entity or any ETF Fund under, or give rise to any payment conditioned, in whole or in part, on a change of control of a Transferred Entity or ETF Fund or approval or consummation of the transactions contemplated hereby, or result in a loss of any benefit to which Seller, any Covered Subsidiary, any Subsidiary of Seller that is a party to an Ancillary Agreement, any Transferred Entity or any ETF Fund is entitled, with or without the giving of notice, the lapse of time or both, under any Contract or other agreement or instrument binding upon Seller, any Covered Subsidiary, any Subsidiary that is a party to an Ancillary Agreement, any Transferred Entity or the ETF Funds or to which any of their respective properties is subject or (iii) assuming the receipt of all consents, approvals, waivers and authorizations and the making of notices and filings (A) referred to in ‎Section 3.05 or ‎Section 7.05 or (B) required to be received or made by Buyer or any of its Affiliates, violate or result in a breach of or constitute a default under any Law to which Seller, any Covered Subsidiary, any Subsidiary that is a party to an Ancillary Agreement, any Transferred Entity or the ETF Funds is subject or under any of their respective Permits, other than, in the case of clauses (ii) and (iii), any conflict, breach, default, termination, Encumbrance, cancellation, modification, acceleration or loss that would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect.



25
    
Exhibit 10.2

Section 3.07 . Legal Proceedings.
(a)      As of the date of this Agreement, there is no Legal Proceeding pending against, or to the Knowledge of Seller, threatened against or affecting Seller, any Subsidiary of Seller (including the Transferred Entities) or any ETF Fund that challenges the validity or enforceability of this Agreement or seeks to enjoin or prohibit consummation of the transactions contemplated by this Agreement. There is no material Legal Proceeding pending against, or to the Knowledge of Seller, threatened against or affecting any Transferred Entity, any ETF Fund or in respect of the ETFs Business.
(b)      There is no material injunction, order, award, judgment, settlement, decree or regulatory action or restriction imposed upon or entered into by the Seller or its Affiliates (including the Transferred Entities) relating to the ETFs Business (or that, upon consummation of the transactions contemplated by this Agreement, would apply to Buyer or any of its Subsidiaries).
Section 3.08 . Organization and Qualification. Each Transferred Entity is, as of the date of this Agreement, and each Transferred Entity will be, as of the Closing, a legal entity duly organized or incorporated, validly existing and, to the extent such concept is relevant in the applicable jurisdiction, in good standing under the Laws of its jurisdiction of organization. Each Transferred Entity has, as of the date of this Agreement, and each Transferred Entity will have, as of the Closing, all requisite corporate or other similar power and authority to own, lease and operate all of its properties and assets and to carry on its businesses in all material respects as conducted, owned, leased or operated as of the date of this Agreement. Each Transferred Entity is, as of the date of this Agreement, and each Transferred Entity will be, as of the Closing, duly qualified to do business in each jurisdiction where the ownership or operation of its properties and assets or the conduct of its businesses requires such Transferred Entity to be so qualified, except for any failure to be so qualified that would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. Seller has made available to Buyer, prior to the date of this Agreement, complete and correct copies of the Organizational Documents of each of the Transferred Entities, in each case, as in effect on the date of this Agreement.
Section 3.09 . Capitalization. (a) ‎Section 3.09(a) of the Seller Disclosure Schedule sets forth, for each Transferred Entity (A) the name and jurisdiction of organization of such Transferred Entity and (B) the authorized and outstanding limited liability company interests or other equity interests in such Transferred Entity and the names of the holders thereof. All of the outstanding limited liability company interests and other outstanding equity interests in the Transferred Entities have been duly authorized and are validly issued, fully paid and non-assessable. Neither of the Transferred Entities owns any equity or debt securities.
(b)      There are no other outstanding securities, preemptive or other rights, rights of first refusal, options, warrants, calls, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, plans, “tag

26
    
Exhibit 10.2

along” or “drag along” rights, agreements, arrangements, undertakings or commitments (collectively, “ Equity Rights ”) (i) under which any Transferred Entity is or may become obligated to issue, deliver, redeem, purchase or sell, or cause to be issued, delivered, redeemed, purchased or sold, or in any way dispose of, any shares of the capital stock or other equity interests, or any securities or obligations that are exercisable or exchangeable for, or convertible into, any shares of the capital stock or other equity interests, of such Transferred Entity, and no securities or obligations evidencing such rights are authorized, issued or outstanding, (ii) giving any Person a right to subscribe for or acquire any equity interest in any Transferred Entity or (iii) obligating any of the Transferred Entities to issue, grant, adopt or enter into any such Equity Right in respect of any Transferred Entity. None of the Transferred Entities has any (x) outstanding Indebtedness that could convey to any Person the right to vote, or that is convertible into or exercisable for Transferred Equity Interests or equity of any Transferred Entity or (y) rights that entitle or convey to any Person the right to vote with the holders of the equity interests of the Transferred Entities on any matter. The outstanding capital stock and other equity interests of the Transferred Entities are not subject to any Contract restricting or otherwise relating to the voting, dividend rights or disposition of such capital stock or other equity interests. There are no outstanding or authorized phantom stock, profit participation or similar rights providing economic benefits based, directly or indirectly, on the value or price of the capital stock or other equity interests of the Transferred Entities.
Section 3.10 . Financial Information. (a) The unaudited interim balance sheet (the “ Balance Sheets ”) as of July 31, 2017 (the “ Balance Sheet Date ”) of each Transferred Entity (i) has been prepared from the books and records of the Seller and its Subsidiaries relating to the ETFs Business in accordance with GAAP (except for the absence of footnotes) and (ii) fairly presents in all material respects, the financial position of the applicable Transferred Entity as of the date thereof. The unaudited schedules of net revenues of the ETFs Business for each of (x) the year ended December 31, 2016 and (y) the six months ended June 30, 2017 (the “ Net Revenue Schedules ”) (i) have been prepared from the books and records of the Seller and its Subsidiaries and (ii) fairly present in all material respects, the net revenues of the ETFs Business for such periods, as described on ‎Section 3.10(a) of the Seller Disclosure Schedule. Complete and correct copies of the Balance Sheets and the Net Revenue Schedules are set forth on ‎Section 3.10(a) of the Seller Disclosure Schedule.
(b)      Seller and its Subsidiaries (including the Transferred Entities) maintain in all material respects a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Transferred Entities, (ii) provide

27
    
Exhibit 10.2

reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Transferred Entities are being made only in accordance with authorizations of management and directors of the Transferred Entities and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Transferred Entities that could have a material effect on the financial statements.
(c) Section 3.10(c) of the Seller Disclosure Schedule correctly sets forth all Indebtedness of the Transferred Entities as of the date hereof, and for each item of such Indebtedness set forth thereon, identifies the debtor, the principal amount as of the date of this Agreement, the creditor, the maturity date and the collateral, if any, securing the Indebtedness.
Section 3.11 . Absence of Undisclosed Liabilities . There are no liabilities or obligations of the Transferred Entities (whether known, absolute, accrued, contingent or otherwise and whether due or to become due), except for (a) liabilities or obligations to the extent reflected or reserved against on the Balance Sheets or set forth in ‎Section 3.11 of the Seller Disclosure Schedule, (b) liabilities or obligations that were incurred by the Transferred Entities pursuant to this Agreement or any Ancillary Agreement, (c) liabilities or obligations of the Transferred Entities incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date or (d) other undisclosed liabilities, which are not, and would not reasonably be expected to be, individually or in the aggregate, material to the ETF Business.
Section 3.12 . Taxes.
(a)      All material Tax Returns required to be filed by the Transferred Entities have been duly and timely filed, and all such Tax Returns are complete and correct in all material respects.
(b)      All Taxes shown to be payable on the Tax Returns described in ‎‎Section 3.12(a) have been paid.
(c)      Each of the Transferred Entities has withheld from its employees, independent contractors or Affiliates, and other third parties all material amounts required to be withheld with respect to any amounts paid or benefits furnished to any such Person and timely paid such amounts withheld to the appropriate Government Entity (or other authority) or set aside in an account for such purpose such amounts for all periods, in each case, in material compliance with all Tax withholding provisions under applicable Laws.
(d)      There are no material Encumbrances for Taxes upon any of the assets of any of the Transferred Entities (other than Permitted Encumbrances).
(e)      There are no material audits, examinations, investigations or other proceedings pending or threatened in writing in respect of Taxes of or with respect

28
    
Exhibit 10.2

to any of the Transferred Entities or the ETFs Business. None of the Transferred Entities has waived any statute of limitations in respect of material Taxes or agreed to any extension of time with respect to a material Tax assessment or deficiency.
(f)      Each Transferred Entity is, or as of the Closing will be, disregarded as an entity separate from its owner for U.S. federal income tax purposes (and for purposes of comparable provisions of applicable state, local or foreign Tax Law). Since the date of Seller’s (or its Affiliate’s) acquisition or formation of each Transferred Entity, no election has been made been made by or in respect of such Transferred Entity (on IRS Form 8832 or otherwise) to classify such Transferred Entity as an association taxable as a corporation for U.S. federal income tax purposes (or for purposes of comparable state, local or foreign Tax Law).
(g)      There are no Tax sharing agreements between any of the Transferred Entities and any member of a consolidated, combined or unitary group of which Seller is a member.
(h)      With respect to the assets relating to the ETFs Business, (i) all material Taxes which will have been required to be paid on or prior to the date hereof, the non-payment of which would result in an Encumbrance on any such assets have been paid, and (ii) Seller has established or caused to be established, in accordance with GAAP applied on a basis consistent with that of preceding periods, adequate reserves for the payment of, and will timely pay, all material Taxes which arise from or with respect to such assets or the operation of the ETFs Business and are incurred in or attributable to the Pre-Closing Tax Period, the non-payment of which would result in an Encumbrance on any such assets.
(i)      Notwithstanding anything to the contrary in this Agreement, this ‎Section 3.12 and Section 3.21(k) contain the only representations and warranties by Seller in this Agreement relating to Tax matters.
Section 3.13 . Employee Benefits.
(a)      No Transferred Entity sponsors, maintains or has entered into or has any liability, other than intercompany charges, with respect to any Benefit and Compensation Arrangement.
(b)      As of the date of this Agreement, none of the Transferred Entities nor any of their respective ERISA Affiliates has or could reasonably be expected to have, on or after the Closing Date, any liability with respect to Title IV of ERISA or Sections 412 or 430 or 4980B of the Code which liability is or could reasonably be expected to become a liability of the Transferred Entities or Buyer and its Affiliates on or after the Closing.
(c)      Neither the execution of this Agreement nor the consummation of the transactions contemplated by this Agreement (whether alone or in connection with other events) will (i) entitle any ETFs Business Employees to severance pay

29
    
Exhibit 10.2

or benefits or any increase in severance pay or benefits or result in an increase in the applicable notice period upon any termination of employment on or after the date of this Agreement, (ii) accelerate the time of any payment or vesting or result in any payment or funding of compensation or benefits to any ETFs Business Employee, or (iii) result in any amount being nondeductible by any Transferred Entity under Section 280G of the Code or subject to an excise tax under Section 4999 of the Code.
(d)      Each Benefit and Compensation Arrangement for any ETFs Business Employee that is intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the Internal Revenue Service stating that the plan is so qualified and to the Knowledge of the Seller no event exists that is reasonably likely to result in the loss of such qualification.
(e) ‎Section 3.13(e) of the Seller Disclosure Schedule sets forth a list containing the following information with respect to each ETFs Business Employee: name; his or her current rate of annual base salary or current wages; job title; employment status (full- or part-time, absent or on leave); work location; credited service date; fiscal year 2016 bonus; severance entitlement; phantom equity entitlements; and date of hire (the “ ETFs Business Employee Information List ”).
(f)      No ETFs Business Employee is party to an employment agreement or otherwise entitled to a guaranteed payment (payable in cash or equity) including any bonus, sign on, severance or retention payment.
Section 3.14 . Permits. The Seller and its Subsidiaries (including the Transferred Entities) hold, and will hold as of the Closing, all Permits required to own or lease their properties and assets relating to the ETFs Business and to conduct the ETFs Business under and pursuant to all applicable Laws, in each case, other than any failure to hold any Permit that would not, individually or in the aggregate, reasonably be expected to have a ETFs Business Material Adverse Effect. Section 3.14 of the Seller Disclosure Schedule sets forth a list of all material such Permits. All such Permits are valid and in full force and effect, except for those the failure of which to be valid or to be in full force and effect would not, individually or in the aggregate, reasonably be expected to have a ETFs Business Material Adverse Effect. No violations with respect to such Permits have occurred and no Legal Proceedings are pending or, to the Knowledge of Seller, threatened to suspend, cancel, modify, revoke or materially limit any such Permits, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. Each ETFs Business Employee who is required to be registered or licensed as a registered representative, investment adviser representative, sales person or an equivalent person with any Government Entity is duly registered as such and such registration is in full force and effect, except for such failures to be so registered or for such registration to remain in full force and effective that,

30
    
Exhibit 10.2

individually or in the aggregate, would not reasonably be expected to have an ETFs Business Material Adverse Effect. To the Knowledge of Seller, none of such licensed or registered ETFs Business Employees has been convicted of any felony or misdemeanor described in Section 9(a)(1) of the Investment Company Act or, to the Knowledge of Seller, engaged in any conduct that would be the basis for, or been subject, or presently is subject, to any disqualification or ineligibility as described in Section 9(a)(1) of the Investment Company Act, and, to the Knowledge of Sellers, there is no Legal Proceeding pending or threatened that is reasonably likely to result in any such disqualification or ineligibility.
Section 3.15 . Intellectual Property. (a) ‎Section 3.15(a) of the Seller Disclosure Schedule lists all material Contracts (excluding licenses for commercial off the shelf computer software) pursuant to which any of the Transferred Entities obtains or grants the right to use any Intellectual Property Right.
(b) Section 3.15(b) of the Seller Disclosure Schedule lists all Contracts (excluding licenses for commercial off the shelf computer software) pursuant to which Seller or any of its Subsidiaries (other than the Transferred Entities) obtains or grants the right to use any Intellectual Property Right that is material to the maintenance and operation of the indices utilized in the ETFs Business as of the date hereof or that is otherwise material to the ETFs Business as of the date hereof, taken as a whole (the Contracts specified in Section 3.15(a) and (b), the “ Material IP Contracts ”).
(c) Section 3.15(c) of the Seller Disclosure Schedule includes a complete and accurate list of all United States, foreign and multinational: (i) Patents and Patent applications; (ii) registered Trademarks and Trademark applications; (iii) Internet domain names; and (iv) Copyright registrations and applications, in each case, that are owned by one or more of the Transferred Entities.
(d) ‎Section 3.15(d) of the Seller Disclosure Schedule includes a complete and accurate list of all United States, foreign and multinational: (i) Patents and Patent applications; (ii) registered Trademarks and Trademark applications; (iii) Internet domain names; and (iv) Copyright registrations and applications, in each case, that are owned by one or more of the Seller or its Affiliates (other than the Transferred Entities) and are used primarily in, or are required in order to conduct, the ETFs Business, including in connection with the maintenance and operation of the indices utilized in the ETFs Business as of the date hereof.
(e)      The material Owned Intellectual Property Rights will be, following the Restructuring, (i) exclusively owned by the Transferred Entities, (ii) covered by the Index Data Agreement, the Assigned Contracts, the Transferred Entity Records, the Other ETFs Business Records or the other information and materials to be provided to Buyer under ‎Section 5.02(c) or (iii) provided under the Transition Services Agreement, and will be, as of Closing, free and clear of all

31
    
Exhibit 10.2

Encumbrances, other than Permitted Encumbrances and none of the Owned Intellectual Property Rights are subject to any license of or right to use any such Owned Intellectual Property Rights to any other party. 
(f)      Following the consummation of the transactions contemplated by this Agreement and the Index Data Agreement, the Buyer and its Subsidiaries (including the Transferred Entities) shall own or have the right to use the (i) Intellectual Property Rights necessary to use the indices utilized in the conduct of the ETFs Business as of the Closing Date in a substantially similar manner as such indices were used by the Seller and the Transferred Entities in connection with the ETFs Business as of the Closing Date and (ii) other Intellectual Property Rights used in the conduct of the ETFs Business as of the date hereof that are material to the ETFs Business, taken as a whole; provided that, it is understood that the foregoing representations and warranties are not intended to address infringement or misappropriation of Intellectual Property Rights, which is addressed by ‎Section 3.15(g).
(g)      To the Knowledge of Seller, the conduct of the ETFs Business as currently conducted does not infringe or misappropriate the Intellectual Property Rights of any other Person. None of the Seller or its Affiliates (including the Transferred Entities) has within the past two years received any written notice or written claim asserting that the conduct of the ETFs Business infringes or misappropriates the Intellectual Property Rights of any other Person. To the Knowledge of the Seller, none of the Owned Intellectual Property Rights is being infringed or misappropriated by any other Person. None of the Owned Intellectual Property Rights has been adjudged invalid or unenforceable in whole or part, and, to the Knowledge of the Seller, all such Intellectual Property Rights are valid and enforceable.
(h)      The Seller and its Subsidiaries have taken commercially reasonable steps to protect their rights in the material Trade Secrets owned by any of them and used in the ETFs Business, excluding any information that any such Person, in the exercise of its business judgment, determined was of insufficient value to protect as a Trade Secret.
Section 3.16 . Labor. None of the Seller and its Affiliates (including the Transferred Entities) is a party to or bound by any labor agreement, union contract or collective bargaining agreement relating to any ETFs Business Employee or other employees engaged in the ETFs Business, and there are no labor unions or other organizations representing any ETFs Business Employee. None of the ETFs Business Employees or other employees engaged in the ETFs Business are represented by any works council, union or other entity. Except as would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect, Seller and each of its Affiliates (including the Transferred Entities) is or has been in compliance with all applicable Laws in respect of employment and employment practices with respect to the ETFs Business Employees and other employees engaged in the ETFs Business

32
    
Exhibit 10.2

including all Laws in respect of terms and conditions of employment, health and safety, employee independent contractor classifications, wages and hours of work, child labor, immigration, employment discrimination, disability rights or benefits, equal opportunity, plant closures and layoffs, affirmative action, workers’ compensation, labor relations, employee leave issues, unemployment insurance and the collection and payment of withholding or social security Taxes and any similar Tax. Since January 1, 2017, there has not been, and there is not now pending or, to the Knowledge of Seller, threatened (a) any material strike, lockout, slowdown, picketing or work stoppage with respect to the ETFs Business Employees or other employees engaged in the ETFs Business or (b) any unfair labor practice charge made against the ETF Business. As of the date of this Agreement, Section 3.16 of the Seller Disclosure Schedule sets forth a list of all ETFs Business Employees who are providing services pursuant to a work visa, a description of the type of visa and related expiration thereof, a list of work visas that will need to be transferred in connection with the transactions contemplated by this Agreement or any Ancillary Agreement and the employing entity through which such ETFs Business Employee’s underlying work visa was obtained.
Section 3.17.      Contracts. (a) ‎Section 3.17(a) of the Seller Disclosure Schedule contains a complete and correct list of all material Contracts as of the date hereof that a Transferred Entity is a party to or is otherwise bound by (the “ Specified Transferred Entity Contracts ”).
(b) Section 3.17(b) of the Seller Disclosure Schedule contains a complete and correct list of all of the following Contracts in effect as of the date of this Agreement relating to the ETFs Business and to which Seller or any of its Affiliates (excluding the Transferred Entities to the extent duplicative of Section 3.17(a)) is a party or otherwise bound by (the “ Specified ETFs Contracts ” and, together with the Specified Transferred Entity Contracts and the Material IP Contracts, the “ Specified Contracts ”):
(i) any Contract for the placement, distribution or record-keeping of the shares of, or the sale of shares, units or other ownership interests of, an ETF Fund that is reasonably expected to provide for payments to, or provided for payments to, or provided for payments from, Seller or any of its Affiliates (including the Transferred Entities) in excess of $300,000 in 2016 or 2017;
(ii) any administration agreement or any other Contract for the provision of administrative services to the ETFs Business that is reasonably expected to provide for payments to, or provided for payments to, or provided for payments from, Seller or any of its Affiliates (including the Transferred Entities) in 2016 or 2017 in excess of $300,000 and by its terms is not terminable without penalty upon notice of 60 days or less;
(iii) any other Contract, other than a Benefit and Compensation Arrangement, relating to the ETFs Business that is reasonably expected to provide for payments to, or provided for payments to, is reasonably

33
    
Exhibit 10.2

expected to provide for payments from or provided for payments from, Seller or any of its Affiliates (including the Transferred Entities) with respect to the ETFs Business in excess of $300,000 in 2017 or 2016;
(iv) any Contract prohibiting or restricting in any material respect the ability of Seller or any of its Affiliates (including the Transferred Entities) (or, following the Closing, Buyer and its Affiliates) to conduct its business, to engage in any business, to solicit any Person, to operate in any geographical area or to compete with any Person, that limits in any material respect the freedom of the Transferred Entities or the ETFs Business (or, following the Closing, Buyer and its Affiliates) to solicit or hire employees, or that requires any Transferred Entity or the ETFs Business (or, following the Closing, Buyer and its Affiliates) to deal exclusively with any Person;
(v) any Contract for any joint venture, strategic alliance, partnership or similar arrangement involving a sharing of profits or expenses or payments based on revenues, profits or assets under management of Seller and its Subsidiaries or any ETF Fund or that primarily relates to the ETFs Business and is material to the ETFs Business, taken as a whole;
(vi) any Contract relating to any Indebtedness of the ETFs Business, other than: (A) any Indebtedness solely between Transferred Entities; or (B) any Indebtedness for which the ETFs Business will not be liable following the Closing;
(vii) any Affiliate Arrangement relating to the ETFs Business that will be in effect after the Closing;
(viii) any Contract, other than a Benefit and Compensation Arrangement, that provides for earn-outs or other similar contingent obligations relating to the ETFs Business and as to which Buyer or its Affiliates will have any liability after the Closing;
(ix) any Contract relating to the acquisition or disposition of any assets or business (whether by merger, sale of stock, sale of assets or otherwise) with any outstanding obligations as of the date of this Agreement that are material to the ETFs Business, taken as a whole, or containing any right of first refusal, right of first offer or similar right that will be binding on Buyer or its Affiliates after the Closing;
(x) any Contract which contains (A) a “clawback” or similar undertaking by Seller or any of its Affiliates (including the Transferred Entities) requiring the reimbursement or refund of any fees or (B) a “most favored nation” or similar provision; and

34
    
Exhibit 10.2

(xi)      any other Contract primarily relating to the ETFs Business and entered into outside the ordinary course of business that is material to the ETFs Business.
(c)      Each Specified Contract is in full force and effect, and is valid and binding on Seller or its Affiliates (including the Transferred Entities) that is a party thereto, and, to the Knowledge of Seller, on each other party thereto, except as would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. Seller has made available to Buyer prior to the date of this Agreement a complete and correct copy of each Specified Contract, including all material amendments, modifications and supplements thereto as in effect on the date of this Agreement. There exists no breach, violation or default of any Specified Contract on the part of Seller and its Affiliates (including the Transferred Entities) which (with or without notice or lapse of time or both) would, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. None of Seller and its Affiliates (including the Transferred Entities) has received any written notice that it has breached, violated or defaulted under, or of an intention to terminate, not to renew or to challenge the validity or enforceability of any Specified Contract, except for any such breach, violation, default, termination, failure to renew or challenge of which would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. All of the right, title and interest of Seller and its Affiliates in the Specified Contracts listed on ‎Section 3.17(c) of the Seller Disclosure Schedule (the “ Assigned Contracts ”) will be assigned, transferred and conveyed to the Transferred Entities (or otherwise to Buyer or its Subsidiaries) in the Restructuring, subject to the receipt of any counter-party consents set forth in ‎Section 3.17(c) of the Seller Disclosure Schedule.
(d)      As of the date hereof, none of Seller and its Subsidiaries (including the Transferred Entities) has entered into, is bound by or subject to any of the following:
(i)      other than investment management and distribution Contracts entered into in the ordinary course of business consistent with past practice and standard indemnities contained in the Organizational Documents for Seller and its Subsidiaries (including the Transferred Entities) in favor of current or former directors, officers and employees of the ETFs Business for operating in that capacity, any Contract providing for the indemnification of any Person with respect to liabilities of the ETFs Business;
(ii)      other than Contracts entered into in the ordinary course of business consistent with past practice, any type of Contract relating to the ETFs Business to cap fees, share fees or other payments, share expenses, waive fees or to reimburse or assume any or all fees or expenses

35
    
Exhibit 10.2

thereunder that in any such case would be material to the ETFs Business; or
(iii)      other than Contracts entered into in the ordinary course of business consistent with past practice, any Contract relating to the ETFs Business requiring Seller or its Subsidiaries (including the Transferred Entities) (A) to provide seed capital or similar investment for any ETF Fund or otherwise with respect to the ETFs Business or (B) to cause the ETFs Business to invest in any investment product.
(e)      Notwithstanding anything to the contrary contained in this Agreement, in no event shall Specified Contracts include any Existing ETF Contract or any Non-Assumed Infrastructure Contracts. A list of the categories and types of all Non-Assumed Infrastructure Contracts material to the ETFs Business is included in Section 3.17(e) of the Seller Disclosure Schedule.
(f) Section 3.17(f) of the Seller Disclosure Schedule sets forth a list of all Existing ETF Contracts (and identifies all such Existing ETF Contracts that contain any “most favored nations” provisions).
(g) Section 3.17(g) of the Seller Disclosure Schedule sets forth a description of any “key person” provision pertaining to ETFs Business Employees in any Contract of Seller and its Subsidiaries (including the Transferred Entities).
Section 3.18.      Absence of Changes. Since December 31, 2016, (i) no event or events have occurred or circumstance or circumstances have arisen or condition or conditions exist relating to Seller and its Affiliates (including the Transferred Entities) with respect to the ETF Business which has had or would reasonably be expected to have, individually or in the aggregate, an ETFs Business Material Adverse Effect and (ii) prior to the date of this Agreement, except, in the case of clause (A), for any actions taken in connection with any transactions contemplated by this Agreement or any Ancillary Agreement or any efforts to sell the ETFs Business (A) the ETFs Business has been conducted in the ordinary course consistent with past practices of the ETFs Business, (B) no Transferred Entity has taken any action that would be prohibited by Section 5.01(c)(A), (B), (D), (E), (F), (G), (H), (I), (K), (L) or (M) (in the case of (M), to the extent relating to the foregoing enumerated subsections) had such terms been applicable during such period has taken and (iii) none of Seller and its Subsidiaries (including the Transferred Entities) has taken any action in connection with the ETFs Business that would be prohibited by Section 5.01(b)(A), (B), (D), (E), (I) or (K) (in the case of (K), to the extent relating to the foregoing enumerated subsections) had such terms been applicable during such period.



36
    
Exhibit 10.2

Section 3.19 . Compliance with Laws. (a) Except with respect to Taxes (which is specifically provided for in ‎Section 3.12 and ‎Article 8), in the past three years, Seller and its Affiliates (including the Transferred Entities) in connection with the ETFs Business and the ETF Funds have complied with, and are currently in compliance with, and currently operate and maintain their businesses in compliance with, all applicable Laws, except for such failures to comply as would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. No unresolved inquiry or investigation by any Government Entity with respect to the Seller and its Affiliates (including the Transferred Entities) in connection with the ETFs Business or the ETF Funds is pending or, to the Knowledge of Seller, threatened, and no Government Entity has notified Seller or its Affiliates (including any Transferred Entity) in writing or, to the Knowledge of Seller, orally of its intention to conduct the same, except in any such case, such investigations as would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. None of Seller or its Affiliates (including the Transferred Entities) with respect to the ETFs Business or the ETF Funds has received any written or, to the Knowledge of Seller, oral notice or communication (i) of any unresolved violation or exception by any Government Entity relating to any examination of the ETFs Business, (ii) threatening to revoke or condition the continuation of any Permit relating to the ETFs Business or (iii) restricting or disqualifying the ETFs Business’ activities (except for restrictions generally imposed by rule, regulation or administrative policy on similarly regulated Persons generally), except in any such case, as would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect.
(b)      No Seller, Affiliate of Seller (including any Transferred Entity) or any of their respective “affiliated persons” (as that term is defined in the Investment Company Act as interpreted by the SEC or its equivalent under any applicable state or foreign Law) has any express or implied understanding or arrangement that would impose an unfair burden on any ETF Fund as a result of the transactions contemplated by this Agreement or would in any way make unavailable to Seller the benefits of Section 15(f) of the Investment Company Act, or any similar safe harbors provided by any applicable state or foreign Law, with respect to such ETF Fund.
(c)      In the past three years, Seller and its Affiliates (including the Transferred Entities) have filed all regulatory reports, schedules, forms, notices, registrations and other documents that relate to the ETFs Business, together with any amendments required to be made with respect thereto, that they were required to file with (i) any applicable domestic or foreign Self-Regulatory Organization and (ii) all other applicable Government Entities, and have paid all fees and assessments due and payable in connection therewith, except in any such case, such matters that would not reasonably be expected to have an ETFs Business Material Adverse Effect.

37
    
Exhibit 10.2

(d)      All interest rate swaps, caps, floors, option agreements, futures and forward Contracts and other similar risk management arrangements and derivative financial instruments in effect as of the date of this Agreement or the Closing Date, other than arrangements and instruments of a de minimis value, entered into by any of the ETF Funds or by Seller or its Affiliates (including the Transferred Entities) for the account of one or more of the ETF Funds, were entered into (i) to the extent entered into by or for the account of such an ETF Fund, in accordance with investment guidelines, prospectuses or offering memoranda applicable to such ETF Fund, (ii) in accordance in all material respects with all applicable Laws and (iii) with counterparties as directed by the applicable ETF Fund (where the ETF Fund so directs), in all cases except where failure to do so would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. Neither Seller or its Affiliates (including the Transferred Entities), any ETF Fund, nor, to the Knowledge of Seller, any other party thereto is in material breach of any of its obligations under any such Contract.
(e)      To the Knowledge of Seller, except as not prohibited under applicable Law, in the past three years, no Transferred Entity, and none of Seller or any of its Affiliates (excluding the Transferred Entities) with respect to the ETFs Business, has offered or given anything of value to any official of a Government Entity, any political party or official thereof, or any candidate for political office (i) with the intent of inducing such Person to use such Person’s influence with any Government Entity to affect or influence any act or decision of such Government Entity or to assist the obtaining or retaining of business for, or with, or the directing of business to a Transferred Entity or the ETFs Business, or (ii) constituting a bribe, kickback or illegal or improper payment to assist a Transferred Entity or the ETFs Business in obtaining or retaining business for or with any Government Entity.
Section 3.20 . Assets Under Management; Investment Advisory Activities.
(a)      Prior to the execution of this Agreement, Seller has delivered to Buyer a list attached as Exhibit B hereto (the “ Base Revenue Schedule ”), with respect to each ETF Fund as of the date hereof:
(i) the name of such ETF Fund and whether such ETF Fund is a 40 Act ETF Fund or a CurrencyShares Fund;
(ii) the Adjusted Assets Under Management (calculated in accordance with clause (a) of the definition of such term) of such ETF Fund as of the Base Date;
(iii)      the stated annualized fee rate payable to the ETFs Business by such ETF Fund under the applicable Existing ETF Contract and the amount of any related fee paid by such ETF Fund to any Person other than Seller and its Subsidiaries (including the Transferred Entities) and the terms of any fee waivers, expense reimbursement (or assumption) arrangements and unreimbursable payments being made by Seller or any

38
    
Exhibit 10.2

of its Subsidiaries (including the Transferred Entities) to brokers, dealers or other Persons with respect to the distribution of shares of such ETF Fund or to services provided to the ETF Fund shareholders, in each case as of the Base Date;
(iv) the rate and method of computation of any amounts payable in respect of revenue sharing or licensing arrangements to any Person by Seller or its Subsidiaries (excluding the Transferred Entities) with respect to such ETF Fund; and
(v) the Revenue Run-Rate in respect of such ETF Fund as of the Base Date.
(b)      Each Existing ETF Contract and any amendment, continuance or renewal thereof, in each case, in effect as of the date of this Agreement, (i) has been duly authorized, executed and delivered by Seller or a wholly-owned Subsidiary of Seller and (ii) is a valid and legally binding agreement, enforceable against Seller or such applicable Subsidiary and, to the Knowledge of Seller, each other party thereto, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles, except, in any such case, for such matters that would not reasonably be expected to have an ETFs Business Material Adverse Effect. Other than reimbursement obligations pursuant to ETF Contracts as in effect on the date hereof and included on the list referenced in ‎Section 3.20(a), or the fee waiver or expense reimbursement arrangements set forth on ‎Section 3.20(b) of the Seller Disclosure Schedule, none of Seller or its Subsidiaries has any arrangements or agreements with any of the ETF Funds pursuant to which Seller or any such Subsidiary has agreed to pay, reimburse or otherwise be responsible for any material expense of or material claims against any of the ETF Funds.
(c)      None of the Transferred Entities is registered, or is required to be registered, in the United States as an investment adviser, commodity trading adviser, commodity pool operator or broker-dealer under the Commodity Exchange Act of 1936, the Exchange Act or the Investment Advisers Act or in a similar capacity in any other jurisdiction, except, in any such case, for such matters that would not reasonably be expected to be, individually or in the aggregate, material to the ETFs Business taken as a whole.
(d)      None of Seller nor its Affiliates have any “seed capital” investments in the ETF Funds.
(e)      The ETFs Business currently maintains the investment management performance composites listed in ‎Section 3.20(e) of the Seller Disclosure Schedule (the “ Composites ”). The performance history of the Composites is
accurate and complete in all material respects. Except as set forth on ‎Section 3.20(e) of the Seller Disclosure Schedule, all of the investment decision makers

39
    
Exhibit 10.2

responsible for the investment performance reflected in the Composites who are employed in the ETFs Business on the date hereof are included among the ETF Business Employees and none of Seller nor its Affiliates will object to the use by Buyer and its Affiliates of all Composites following the Closing.
Section 3.21 . ETF Funds. (a) Organization . Each ETF Fund has been duly organized and is validly existing and in good standing under the Laws of the jurisdiction of its organization and has, and at all times in the past three years (or, if later, since its launch date), had the requisite power, right and authority to carry on its business as it is now (or was then) being conducted in each jurisdiction where it is organized or listed on an exchange, except where such lack of such power, right or authority would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect, and (except in the case of the CurrencyShares Funds) is duly registered with the SEC as an investment company under the Investment Company Act. Each ETF Fund that is required to be registered as a regulated fund or investment company under the Laws of any jurisdiction other than the United States is so registered, other than any failure to be so registered that would not reasonably be expected to have an ETFs Business Material Adverse Effect.
(b)      Fund Boards . Each of the 40 Act ETF Funds is governed by a board of trustees or board of directors at least 75% of whom are not “interested persons” (as defined in the Investment Company Act) of the investment adviser to such ETF Fund.
(c)      Compliance . (i) Each ETF Fund has complied in the past three years (or, if later, since its launch date) and is in compliance with its investment policies and restrictions, if any, as such policies and restrictions may be set forth in its offering or plan documents (as they may be amended from time to time) and in applicable Laws, if any, and (ii) the value of the Net Assets of each ETF Fund has been determined in the past three years (or, if later, since its launch date) and is being determined using portfolio valuation methods that comply in all material respects with the methods described in its offering or plan documents, if any, and the requirements of any applicable Laws, other than, in each case of (i) and (ii), any non-compliance that would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. There is no material Legal Proceeding pending against any ETF Fund or, to the Knowledge of Seller, threatened against any ETF Fund. There is no material injunction, order, award, judgment, settlement, decree or regulatory restriction not generally imposed on similarly situated investment funds imposed upon or entered into by any ETF Fund.
(d)      Fund Financial Statements .
(i)      Seller has made available to Buyer, or directed Buyer to, prior to the date of this Agreement copies of the financial statements for the most recently completed fiscal year, to the extent that they exist, of each of the ETF Funds (the “ Fund Financial Statements ”). Each of the

40
    
Exhibit 10.2

Fund Financial Statements fairly presents in all material respects the results of operations and changes in Net Assets of the respective ETF Fund as of the date thereof
(ii)      (A) The annual report to shareholders of each of the ETF Funds with respect to such ETF Fund’s most recently completed fiscal year and all other documents filed subsequent to such fiscal year end under Section 30(a) or 30(b) of the Investment Company Act (or the Exchange Act in the case of the CurrencyShares Funds), in each case in the form filed with the SEC or delivered to shareholders (each, an “ ETF Fund Financial Report ”), did not, as of their respective dates (without giving effect to any amendment thereto filed after the date hereof) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were or are made, not misleading, and (B) each of the financial statements contained in or incorporated by reference into the ETF Fund Financial Reports (including the related notes and schedules thereto) fairly presents in all material respects the financial position of the entity or entities to which it relates as of its date, in accordance with generally accepted accounting principles consistently applied, except in each case as may be noted therein, subject to normal year-end audit adjustments in the case of unaudited statements, except in the cases of clauses (A) and (B) for instances of noncompliance that would not, individually or in the aggregate, have an ETFs Business Material Adverse Effect.
(e)      Principal Offering Documents for ETF Funds . To the extent a prospectus, statement of additional information or offering memorandum (“ Prospectus ”) is used as of the date of this Agreement to offer shares or other interests in an ETF Fund, a copy of such Prospectus has been made available to Buyer prior to the date of this Agreement. Each Prospectus used as of the date of this Agreement to offer shares or other interests in an ETF Fund has been prepared in compliance with the requirements of applicable Laws, except for any failure to comply that would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. In the past three years, each ETF Fund has timely filed all material Prospectuses, financial statements, other forms, reports, sales literature and advertising, and any other documents required to be filed with any applicable Government Entity and any required amendments thereto (the “ Reports ”), except where the failure to timely file a Report would not reasonably be expected to have an ETFs Business Material Adverse Effect. In the past three years, the Reports have been prepared in compliance with the requirements of applicable Laws, except for any failure to comply that would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect.
(f)      ETF Fund Shares . All issued and outstanding ETF Fund shares and all other interests, if applicable, have been duly and validly issued, are fully paid

41
    
Exhibit 10.2

and, unless otherwise required by applicable Law, nonassessable, and were not issued in violation of preemptive or similar rights or applicable Law, except for such matters that would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. In the past three years, all outstanding ETF Fund shares and all other interests, if applicable, that were required to be registered under the Securities Act have been sold in all material respects pursuant to an effective registration statement filed thereunder (and, where applicable, under the Investment Company Act) and are qualified in all material respects for sale, or an exemption from any requirement to so qualify is in full force and effect, in each state and territory of the United States and the District of Columbia and in any foreign jurisdiction to the extent required under applicable Law and no such registration statement contained, as of its effective date, any untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or is subject to any stop order or similar order restricting its use, other than, in each case, any failure to be registered or qualified or exempt, any inclusion of an untrue statement of a material fact or any failure to state a material fact that is required to be stated or any order restricting its use that would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect.
(g)      Contracts . No ETF Fund is party to or subject to any Contract which is in violation, breach or event of default, or event or condition that, after notice or lapse of time or both, would constitute a violation, breach or event of default thereunder, on the part of the ETF Fund, or to the Knowledge of Seller, any other Person, except for such matters that would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. All investment advisory services rendered to the ETF Funds by Seller and its Subsidiaries have been rendered by them pursuant to Contracts that were approved by the boards of the ETF Funds and annually continued in effect by such boards where such approval and annual continuances are required under applicable Law and, to the extent required by applicable Law, the holders of shares of beneficial interest or of common stock in each ETF Fund, except for such matters that would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect.
(h)      Policies and Procedures . Each 40 Act ETF Fund has written policies and procedures adopted pursuant to Rule 38a-1 of the Investment Company Act that are reasonably designed to prevent, detect and correct material violations of the Federal Securities Laws, as such term is defined in Rule 38a-1(e)(1) under the Investment Company Act. In the past three years, there have been no Material Compliance Matters, as such term is defined in Rule 38a-1(e)(2) under the Investment Company Act, for any 40 Act ETF Fund, other than those which (i) have been reported to the applicable ETF Fund Board and satisfactorily remedied or are in the process of being remedied and (ii) would not reasonably be expected to have an ETFs Business Material Adverse Effect. Each ETF Fund that is required to be registered under any other applicable Law has, to the extent

42
    
Exhibit 10.2

required by such other applicable Law, written policies and procedures that are reasonably designed to prevent, detect and correct material violations of such applicable Law, and, in the past three years, no such violations have been detected other than those that have been satisfactorily remedied or are in the process of being remedied and would not reasonably be expected to have an ETFs Business Material Adverse Effect. ‎Section 3.21(h) of the Seller Disclosure Schedule sets forth a true, correct and complete list of all strategies or plans currently contemplated by Seller or its Subsidiaries with respect to the ETF Funds to effect any merger or closure (or, in respect of the ETF Funds branded “Guggenheim”, “CurrencyShares” or “BulletShares” or any derivative thereof, re-branding of the ETF Fund name) of, or any replacement of the portfolio management team for, any ETF Fund, other than as contemplated by ‎Section 7.05.
(i)      Proxy Solicitation Materials . Except to the extent it relates to Buyer, its Affiliates or the Buyer Fund or Buyer Fund Series or includes information provided by Buyer, its Affiliates or the Buyer Fund or Buyer Fund Series specifically for inclusion or incorporation by reference therein (to which extent no representation by Seller is made) and except in the case of a Fund Merger Proxy Statement/Prospectus, the proxy solicitation, or other consent solicitation, materials prepared by Seller or its Subsidiaries and distributed to the investors in a ETF Fund in connection with the Assignment Requirements will not, at the time of the mailing of such proxy, or other consent, materials or any amendments or supplements thereto, or at the time of the shareholders or investors meeting held in relation thereto, contain any untrue statement of a material fact or omit any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and will contain all information necessary in order to make the disclosure of information therein satisfy the requirements of applicable Laws in all material respects. None of the information supplied or to be supplied by or on behalf of Seller, its Affiliates or the 40 Act ETF Funds specifically for inclusion or incorporation by reference in a Fund Merger Proxy Statement/Prospectus will, at the time of the mailing of such document or any amendments or supplements thereto, or at the time of the shareholders or investors meeting held in relation thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(j)      Existing ETF Contracts. Each Existing ETF Contract subject to Section 15 of the Investment Company Act has been duly approved, continued and at all times in the past three years has been in compliance with the Investment Company Act, except for such matters that would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect. Each Existing ETF Contract, whether or not subject to Section 15 of the Investment Company Act, has been performed by the ETFs Business in the past three years in accordance with its terms, except for such matters that would not,

43
    
Exhibit 10.2

individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect.
(k)      Certain Tax Matters of the ETF Funds . ‎Section 3.21(k) of the Seller Disclosure Schedule sets forth with respect to each ETF Fund the intended classification of such ETF Fund as:
(i) a regulated investment company taxable under Subchapter M of Chapter 1 of the Code and under any similar provisions of state or local Law in any jurisdiction in which such ETF Fund filed, or is required to file, a Tax Return;
(ii) a partnership for U.S. federal income tax purposes and any similar provisions of state or local law in any jurisdiction in which such ETF Fund filed or was required to file, a Tax Return;
(iii)      a grantor trust taxable under Subchapter J of Chapter 1 of the Code and under any similar provisions of state or local Law in any jurisdiction in which such ETF Fund filed, or is required to file, a Tax Return; or
(iv) an entity organized under the laws of a foreign country that qualifies for the special Tax treatment under the laws of such foreign country specified on ‎Section 3.21(k) of the Seller Disclosure Schedule; and, to the Knowledge of Seller, each such ETF Fund has qualified, for all taxable years since its inception, to be so classified. Except as would not reasonably be expected to have an ETFs Business Material Adverse Effect, each ETF Fund (i) has duly and timely filed with the appropriate Government Entity all material Tax Returns required to be filed and all such Tax Returns are true, correct and complete in all material respects, (ii) has timely paid, or withheld and paid over, all Taxes due or claimed to be due by any Government Entity or with respect to Taxes not yet due and payable, made an adequate provision on its financial statements in accordance with GAAP or other relevant applicable accounting principles, (iii) is in compliance with all applicable Laws regarding the filing, solicitation, collection and maintenance of any forms, certifications and other information required in connection with federal, state, local or foreign Tax reporting requirements, (iv) that is intended to be a tax-exempt municipal bond fund has satisfied the requirements of Section 852(b)(5) of the Code, and is qualified to pay exempt interest dividends as defined therein, and (v) with variable insurance trust portfolios has complied with the diversification requirements of Section 817 of the Code.
(l)      Plan Assets. None of the assets of the ETF Funds constitute “plan assets” within the meaning of Department of Labor Regulation Section 2510.3-101, as modified by Section 3(42) of ERISA.

44
    
Exhibit 10.2

(m)      ERISA. Neither (i) any Transferred Entity nor (ii) any affiliate thereof (as defined in Section VI(d) of Department of Labor Class Exemption 84-14 (“ PTE 84-14 ”)) who is also a director, officer or employee of a Transferred Entity, and who is also a Transferred Employee, has been convicted of or released from imprisonment with respect to any felony or other crime that would prevent the Buyer from qualifying as a qualified professional asset manager as defined in PTE 84-14 after the Closing.
Section 3.22 . Property. None of the Transferred Entities own any real property or any interests therein.
Section 3.23. [Intentionally Omitted]
Section 3.24 . Sufficiency of Assets. Except for those assets and services listed in ‎Section 3.24 of the Seller Disclosure Schedule, and except for the fact that the Buyer will not (1) acquire Seller’s registered investment adviser, distribution and broker-dealer Subsidiaries engaged in the ETFs Business, (2) acquire any employees engaged in the ETFs Business other than the Identified Business Employees, or (3) be assigned, transferred or conveyed the right, title and interest of Seller and its Affiliates in any Specified Contracts other than the Assigned Contracts (it being understood that the Specified Transferred Entity Contracts will be indirectly conveyed to Buyer upon its acquisition of the Membership Interests notwithstanding that they are not Assigned Contracts), (a) the assets, properties and rights owned by the Transferred Entities following the Restructuring, taken together with (x) the rights under the Index Data Agreement and under the Assigned Contracts, (y) the Transferred Entity Records, the Other ETFs Business Records and the other information and materials to be provided to Buyer under ‎Section 5.02(c) and (z) the administrative services to be provided under the Transition Services Agreement, are in all material respects sufficient (i) for the conduct of the ETFs Business immediately following the Closing in substantially the same manner as conducted on the date hereof or as of the Closing Date and (ii) to provide the services relating to the use and maintenance of indexes that are utilized by the ETF Funds on the date hereof as such services are provided by Seller and its controlled Subsidiaries on the date hereof or as of the Closing Date in connection with the ETFs Business in all material respects, and (b) there are no material assets, properties or rights primarily used in the conduct of the ETFs Business as presently conducted which will not following the Restructuring be (i) owned, leased or licensed by the Transferred Entities, (ii) covered by the Index Data Agreement, the Assigned Contracts, the Transferred Entity Records, the Other ETFs Business Records or the other information and materials to be provided to Buyer under ‎Section 5.02(c) or (iii) administrative services to be provided under the Transition Services Agreement.



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Exhibit 10.2

Section 3.25 . Finders’ Fees. Except for fees that will be paid by Seller and its Affiliates (other than the Transferred Entities), there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Seller or any of its Affiliates (including the Transferred Entities and their Subsidiaries) who would be entitled to any fee or commission from any Person (other than Seller or one of its Affiliates other than a Transferred Entity) in connection with this Agreement, any of the Ancillary Agreements or the transactions contemplated hereunder and thereunder.
Section 3.26 . Insurance. The Transferred Entities will be covered, prior to Closing, by insurance policies of Seller, and the Transferred Entities do not (and will not prior to Closing) maintain any other insurance policies or coverage.
Section 3.27 . Affiliate Arrangements. Other than Contracts that by their terms are terminable by either party thereby without penalty upon notice of 60 days or less and set forth in ‎Section 3.27 of the Seller Disclosure Schedule, there is no Contract, liability or obligation (whether or not evidenced by a writing) between a Transferred Entity, on the one hand, and Seller or any of its Affiliates (other than the Transferred Entities), on the other hand (any such Contract, liability or obligation, an “ Affiliate Arrangement ”).
Section 3.28 . Filings. None of the information regarding Seller, any of its Affiliates or any ETF Fund supplied or to be supplied by Seller, any of its Affiliates or any ETF Fund in writing specifically for inclusion in any application, filing or other document to be filed by Buyer, its Subsidiaries or a Buyer Fund with any Government Entity in connection with the transactions contemplated by this Agreement will, at the respective times such documents are filed with any such Government Entity, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
Section 3.29 . No Other Representations. Seller acknowledges and agrees that, except for the representations and warranties contained in Article 4, none of Buyer or the Buyer Funds or any of their respective Affiliates or representatives makes or has made any representation or warranty, either express or implied, concerning Buyer or the Buyer Funds or any of their respective Affiliates or representatives or the transactions contemplated by this Agreement.





46
    
Exhibit 10.2

ARTICLE 4     
REPRESENTATIONS AND WARRANTIES OF BUYER
Subject to ‎Section 13.11, except as set forth in the Buyer Disclosure Schedule, Buyer represents and warrants to Seller as of the date of this Agreement and as of the Closing Date as follows:
Section 4.01 . Organization and Qualification. Buyer is duly formed, validly existing and in good standing under the laws of its jurisdiction of formation. Buyer has the requisite corporate power and authority to carry on its business as conducted as of the date of this Agreement and to own, lease and operate all of its properties and assets, in all material respects as conducted, owned, leased or operated as of the date of this Agreement. Buyer is duly qualified to do business in each jurisdiction in which the nature of its business or the character or location of the properties and assets owned, leased or operated by it makes such qualification necessary other than any failure to be so qualified that would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect.
Section 4.02 . Corporate Authorization. Buyer has full corporate power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it is or will be a party and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereunder and thereunder. The execution, delivery and performance by Buyer of this Agreement and each Ancillary Agreement to which it is or will be a party, and each of the transactions contemplated hereunder and thereunder, have been duly and validly authorized, and no additional corporate or shareholder authorization or consent is required in connection with the execution, delivery and performance by Buyer of this Agreement and each Ancillary Agreement or any of the transactions contemplated hereunder or thereunder.
Section 4.03 . Consents and Approvals. Other than in connection with (i) the HSR Act or any other Antitrust Laws, (ii) any applicable banking, securities or other financial services Laws of any banking commission or any securities or other financial services regulator, (iii) filings with the NYSE and compliance with any applicable requirements of the Securities Act, the Exchange Act and any other applicable state or federal securities laws or (iv) such other Laws, in each case of (i) through (iii), that are set forth on ‎Section 4.03 of the Buyer Disclosure Schedule (the matters covered under clauses (i) through (iv) above, collectively, the “ Buyer Required Approvals ”), Buyer and its Affiliates are not required to obtain any authorization, waiver, consent or approval of, make any filing or registration with, or give any notice to, any Government Entity or to obtain any Permit in connection with the execution, delivery and performance by Buyer of this Agreement or the execution, delivery and performance by Buyer and its Subsidiaries of each of the Ancillary Agreements to which Buyer or any of its Subsidiaries is or will be a party or the consummation by Buyer or its Subsidiaries of any of the transactions contemplated hereunder or thereunder, other than any

47
    
Exhibit 10.2

authorization, waiver, consent, approval, filing, registration notice or Permit, the failure of which to obtain, make or give would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect. As of the date hereof, Buyer is not aware of any reason why any Buyer Required Approvals will not be received in order to permit the consummation of the transactions contemplated hereby.
Section 4.04 . Non-Contravention. The execution, delivery and performance by Buyer of this Agreement and by Buyer and its Subsidiaries of each of the Ancillary Agreements to which Buyer or any of its Subsidiaries is or will be a party, and the consummation by Buyer and its Subsidiaries of the transactions contemplated hereunder and thereunder, do not and will not (i) conflict with or violate any provision of the Organizational Documents of Buyer or any of its Subsidiaries, (ii) assuming the receipt of all consents, approvals, waivers and authorizations and the making of the notices and filings referred to in ‎Section 4.03, conflict with, or result in the breach of, or constitute a default under, or result in the termination, Encumbrance, cancellation, modification or acceleration of any right or obligation of Buyer or any of its Subsidiaries under, or give rise to any payment conditioned, in whole or in part, on approval or consummation of the transactions contemplated hereby, or result in a loss of any benefit to which Buyer or any of its Subsidiaries is entitled, with or without the giving of notice, the lapse of time or both, under any Contract or other agreement or instrument binding upon Buyer or any of its Subsidiaries or to which the property of Buyer or any of its Subsidiaries is subject or (iii) assuming the receipt of all consents, approvals, waivers and authorizations and the making of notices and filings (A) referred to in ‎Section 4.03 or (B) required to be received or made by any of the Transferred Entities or by Seller of any of its Affiliates, violate or result in a breach of or constitute a default under any Law to which Buyer or any of its Subsidiaries is subject or under any Permit of Buyer or any of its Subsidiaries, other than, in the case of clauses (ii) and (iii), any conflict, breach, default, termination, Encumbrance, cancellation, modification, acceleration or loss that would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect (excluding, for this purpose only, clause (H) of the definition of Material Adverse Effect).
Section 4.05 . Binding Effect. Assuming the due authorization, execution and delivery of this Agreement and the Ancillary Agreements by Seller (or, in the case of the Ancillary Agreements, Seller or a Subsidiary of Seller), this Agreement constitutes, and each Ancillary Agreement when executed and delivered will constitute, a valid and legally binding obligation of Buyer (or, in the case of the Ancillary Agreements, of Buyer or a Subsidiary of Buyer) enforceable against Buyer or such Subsidiary in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

48
    
Exhibit 10.2

Section 4.06 . Financial Capability. Buyer has, or will have at the Closing, funds sufficient to pay the amounts required to be paid under ‎Article 2 and to pay all related fees and expenses hereunder.
Section 4.07 . Investment Purpose. Buyer is acquiring the Membership Interests for its own account solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act or state securities or “blue sky” Law, or with any present intention of distributing or selling such interests in violation of any such Law. Buyer has requested, received, reviewed and considered all information that Buyer deems relevant in making an informed decision to acquire the Membership Interests, and has had an opportunity to discuss the business, management and financial affairs of the Transferred Entities with management of the ETFs Business and also had an opportunity to ask questions of officers of Seller or its Subsidiaries (including the Transferred Entities) that were answered to Buyer’s satisfaction; provided that such inquires do not impair the rights of Buyer to rely on the representations and warranties of Seller as set forth in ‎Article 3. Buyer understands that Seller is relying on the statements contained herein to establish an exemption from registration under U.S. federal and state securities Laws. Buyer acknowledges that the Membership Interests are not registered under the Securities Act and that the Membership Interests may not be transferred, sold or otherwise disposed of except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and pursuant to Laws and regulations of other jurisdictions as applicable.
Section 4.08 . Information in Proxy and Consent Solicitation Materials. None of the information supplied or to be supplied by or on behalf of Buyer, its Affiliates or the Buyer Fund or the Buyer Series specifically for inclusion or incorporation by reference in the proxy solicitation, or other consent solicitation, materials distributed to the investors in an ETF Fund in connection with the Assignment Requirements will, at the time of the mailing of such proxy, or other consent, materials or any amendments or supplements thereto, or at the time of the shareholders or investors meeting held in relation thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Except to the extent it relates to Seller, its Affiliates or the 40 Act ETF Funds or with respect to information provided by Seller, its Affiliates or the 40 Act ETF Funds specifically for inclusion or incorporation by reference therein (to which extent no representation by Buyer is made), each Fund Merger Proxy Statement/Prospectus will not, at the time of the mailing of such document or any amendments or supplements thereto, or at the time of the shareholders or investors meeting held in relation thereto, contain any untrue statement of a material fact or omit any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and will contain all information necessary in order to make the disclosure of information therein satisfy the requirements of applicable Laws in all material respects.

49
    
Exhibit 10.2

Section 4.09 . Section 15(f) of the Investment Company Act. None of Buyer or any of its respective “interested persons” (as that term is defined under applicable provisions of the Investment Company Act and interpreted by the SEC) has any express or implied understanding or arrangement which would impose an “unfair burden” (as such term is used in Section 15(f) of the Investment Company Act) on any 40 Act ETF Fund or any Buyer Fund for purposes of Section 15(f) of the Investment Company Act as a result of the transactions contemplated hereby or which would in any way cause Section 15(f) of the Investment Company Act to be unavailable to Seller.
Section 4.10 . Filings. None of the information regarding Buyer, any of its Affiliates or Buyer Fund or any Buyer Fund Series supplied or to be supplied by Buyer, any of its Affiliates or Buyer Fund or any Buyer Fund Series in writing for inclusion in any application, filing or other document to be filed with any Government Entity in connection with the transactions contemplated by this Agreement will, at the respective times such documents are filed with any such Government Entity, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
Section 4.11 . Compliance with Laws. In the past three years, Buyer, its Subsidiaries and Buyer Fund and the Buyer Fund Series have complied with, are currently in compliance with, and currently operate and maintain their businesses in compliance with, all applicable Laws, except for such failures to comply as would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect. No unresolved investigation by any Government Entity with respect to any of Buyer, its Subsidiaries, the Buyer Fund or the Buyer Fund Series is pending or, to the Knowledge of Buyer, threatened, and no Government Entity has notified Buyer or any of its Subsidiaries in writing or, to the Knowledge of Buyer, orally of its intention to conduct the same, except, in any such case, such investigations as would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect. None of Buyer or its Subsidiaries or the Buyer Fund or the Buyer Fund Series has received any written or, to the Knowledge of Buyer, oral notice or communication (i) of any unresolved violation or exception by any Government Entity, (ii) threatening to revoke or condition the continuation of any Permit or (iii) restricting or disqualifying their activities (except for restrictions generally imposed by rule, regulation or administrative policy on similarly regulated Persons generally), except in any such case, as would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect.
Section 4.12 . Finders’ Fees. Except for fees that will be paid by Buyer, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Buyer or any of its Affiliates who might be entitled to any fee or commission from Buyer or any of its Affiliates in

50
    
Exhibit 10.2

connection with the transactions contemplated by this Agreement or any Ancillary Agreement.
Section 4.13 . Legal Proceedings. As of the date of this Agreement, there is no Legal Proceeding pending against, or to the Knowledge of Buyer, threatened against, or affecting Buyer or any of its Affiliates that challenges the validity or enforceability of this Agreement or seeks to enjoin or prohibit consummation of the transactions contemplated by this Agreement. There is no Legal Proceeding pending against, or to the Knowledge of Buyer, threatened against, or affecting Buyer or any of its Affiliates, except for any such Legal Proceeding that would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect.
Section 4.14 . No Other Representations. Buyer acknowledges and agrees that, except for the representations and warranties contained in ‎Article 3, none of Seller or the ETF Funds or any of their respective Affiliates or representatives makes or has made any representation or warranty, either express or implied, concerning Seller or the ETF Funds or any of their respective Affiliates or representatives or the transactions contemplated by this Agreement.
ARTICLE 5     
COVENANTS OF SELLER
Section 5.01 . Conduct of the ETFs Business.
Seller agrees that:
(a)      From the date of this Agreement to and through the earlier of the Closing and the termination of this Agreement in accordance with its terms, except (i) as set forth in ‎Section 5.01(a) of the Seller Disclosure Schedule, (ii) as otherwise expressly contemplated by this Agreement, (iii) as required by any applicable Law or (iv) with Buyer’s prior consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), Seller shall, and shall cause its Subsidiaries (including the Transferred Entities) to, conduct the ETFs Business in the ordinary course consistent with past practice in all material respects and use commercially reasonable efforts to (x) preserve intact the material business and operations of the ETFs Business and preserve intact its material rights, franchises, goodwill and relationships with the ETF Funds (including the boards of trustees and shareholders thereof), any applicable Government Entity, customers, lessors, suppliers and others with whom it does business as part of the ETFs Business and (y) keep available the services of the ETFs Business Employees.
(b)      Without limiting the generality of ‎Section 5.01(a), from the date of this Agreement to and through the earlier of the Closing and the termination of this Agreement in accordance with its terms, except (i) as set forth in the corresponding subsection of ‎Section 5.01(b) of the Seller Disclosure Schedule, (ii)

51
    
Exhibit 10.2

as otherwise expressly contemplated by this Agreement, (e) as required by any applicable Law, or (iii) with Buyer’s prior consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), Seller shall not, and shall cause its Subsidiaries (including the Transferred Entities) not to, do any of the following with respect to the ETFs Business:
(A) sell, lease, license (other than in the ordinary course consistent with past practice), transfer, pledge, convey, assign, mortgage or otherwise dispose of any of their respective material rights, properties or assets, tangible or intangible, that (1) are primarily used in the ETFs Business or, (2) with respect to assets that are not primarily used in the ETFs Business, in a manner that will impair the ability of Seller and its Subsidiaries to perform their obligations under this Agreement or the Ancillary Agreements in any material respect, other than, in each case, obsolete or non-used assets or rights or properties or assets with a net book value not in excess of $500,000 in the aggregate;
(B)      issue, sell, deliver, pledge, transfer, dispose of or encumber (1) any limited liability company interest or any other equity interests in any Transferred Entity or (2) any Equity Rights in respect of, securities convertible into, exchangeable for or evidencing the right to subscribe for or acquire either any securities convertible into or exchangeable for, or evidencing the right to subscribe for or acquire, any limited liability company interest or any other equity interest in, any Transferred Entity or make any other changes in the capital structure of any Transferred Entity;
(C)      other than in the ordinary course of business consistent with past practice, (1) amend, cancel, waive, modify, transfer or otherwise dispose of or permit to lapse any material Intellectual Property Rights used primarily in connection with the ETFs Business, (2) grant any exclusive license or other material rights thereunder to any Person that adversely impact the ETFs Business or, (3) in the case of Intellectual Property Rights used primarily in the ETFs Business, grant any license or other rights thereunder to any Person;
(D)      except as required by Law, the terms of any Benefit and Compensation Arrangement in effect as of the date of this Agreement or as set forth in ‎Section 5.01(b)(iv)(D) of the Seller Disclosure Schedule, (1) increase or agree to increase the compensation of any ETFs Business Employee, other than (x) payment of any incentive compensation accrued and payable in the ordinary course of business consistent with past practice, and (y) salary increases in the ordinary course of business

52
    
Exhibit 10.2

consistent with past practice for ETFs Business Employees, (2) increase or agree to materially increase any severance benefits for, or amend or terminate any benefit or compensation arrangements primarily resulting in material benefit or material detriment to, any ETFs Business Employees, other than as generally applicable to employees of the Seller participating in such plans, (3) (I) establish or adopt any Benefit and Compensation Arrangement at any of the Transferred Entities or (II) enter into or adopt any new change in control, severance or retention agreement, arrangement, plan or policy for the primary benefit of, or with, any ETFs Business Employees, or (4) terminate (I) other than in the ordinary course of business consistent with past practice or (II) otherwise without cause, any ETFs Business Employees;
(E)      (1) commence or pay, discharge, settle or satisfy any Legal Proceedings relating to the ETFs Business except settlements involving only monetary remedies with a value not in excess of $200,000 for any individual Legal Proceeding or $400,000 in the aggregate, other than the commencement of any such Legal Proceeding in the ordinary course of business consistent with past practice or (2) waive or release any material rights or claims, or agree or consent to the issuance of any injunction, decree, order or judgment restricting or otherwise relating to the ETFs Business;
(F)      (1) enter into any Contract between Seller or any of its Subsidiaries, on the one hand, and any Transferred Entity, on the other hand, (2) enter into a Contract relating to the ETFs Business containing a “most favored nation” provision which would be applicable to Buyer and its Affiliates following the Closing, (3) amend any existing Contract relating to the ETFs Business in a manner to provide that a “most favored nation” provision contained therein would have a similar effect, (4) except in the ordinary course of business consistent with past practice, materially amend, modify, terminate, renew or cancel any Specified Contract or enter into any new Contract that would be a Specified Contract if in existence as of the date hereof, or (5) enter into any Contract prohibiting or restricting the ability of the ETFs Business (or, following the Closing, Buyer and its Affiliates) to conduct its business, to engage in any business, to solicit any Person, to operate in any geographical area or to compete with any Person, that limits the freedom of the ETFs Business (or, following the Closing, Buyer and its Affiliates) to solicit or hire employees, or that requires the ETFs Business (or, following the Closing, Buyer and its Affiliates) to deal exclusively with any Person;

53
    
Exhibit 10.2

(G)      form, organize or sponsor any collective investment vehicle or other fund except (1) as contemplated by or consistent with the current business plans of the ETFs Business or (2) in the ordinary course of business consistent with past practice;
(H)      take any action that would prevent any ETF Fund which is required to be registered with the SEC or comparable regulatory or self-regulatory authority of any jurisdiction as a pooled investment vehicle from qualifying as a “regulated investment company” under Section 851 of the Code or comparable pass-through regime in any other applicable jurisdiction to the extent such status is intended in such ETF Fund’s constituent documents or marketing materials;
(I) make any material changes in its methods, practices, principles or policies of financial accounting, except as may be required under GAAP;
(J) with respect to the Transferred Entities or except as would not materially and adversely affect the ETFs Business, make, change or revoke any material tax election, file any material amended Tax Return, surrender any claim to a material Tax refund, or consent to any extension or waiver of the limitations period applicable to any Tax claim or assessment; or
(K) authorize or enter into any Contract or commitment with respect to any of the foregoing.
(c)      Without limiting the generality of ‎Section 5.01(a) or ‎Section 5.01(b), from the date of this Agreement to and through the earlier of the Closing and the termination of this Agreement in accordance with its terms, except (i) as set forth in the corresponding subsection of ‎Section 5.01(c) of the Seller Disclosure Schedule, (ii) as otherwise expressly contemplated by this Agreement, (iii) as required by any applicable Law, or (iv) with Buyer’s prior consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), Seller shall cause each of the Transferred Entities not to do any of the following:
(A) sell, lease, license (other than ordinary course intellectual property licenses), transfer, pledge, convey, assign, mortgage or otherwise dispose of any of their respective material rights, properties or assets, tangible or intangible, other than making cash dividends or distributions to their members;
(B)      other than in the ordinary course of business consistent with past practice, amend, cancel, waive, modify, transfer or otherwise dispose of or permit to lapse any material Intellectual Property Rights used in connection with the ETFs

54
    
Exhibit 10.2

Business, grant any license or other rights thereunder to any Person;
(C)      hire any employees or contractors, enter into any agreement or commitment to provide any pension, welfare, retirement allowance, severance or other employee benefits or enter into or commit to any change in control or severance agreement, arrangement, plan or policy;
(D)      (1) commence or pay, discharge, settle or satisfy any Legal Proceedings or (2) waive or release any material rights or claims, or agree or consent to the issuance of any injunction, decree, order or judgment restricting or otherwise affecting its business or operations;
(E)      make or incur any capital expenditures;
(F)      amend in any material respect any provision of any Organizational Document of any Transferred Entity or of any term of any outstanding security issued by any Transferred Entity;
(G)      merge or consolidate with any other Person or acquire (by merger, consolidation, purchase of assets or equity interests or otherwise) any businesses, assets, properties, or interests in any other Person;
(H) adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
(I)(1) incur, assume or guarantee any Indebtedness that will remain outstanding following the Closing, (2) cancel or waive any claims under any material Indebtedness or amend or modify in any material respect the terms relating to such Indebtedness, (3) other than in the ordinary course of business consistent with past practice, assume, guarantee, endorse or otherwise as an accommodation become responsible for obligations of any other Person, or (4) other than in the ordinary course of business consistent with past practice make any material loans or advances;
(J) materially amend, terminate or allow to lapse any material Permit;
(K)      assume or become liable for any obligation of any other person, other than the assumption of Contracts as expressly contemplated by the Restructuring;

55
    
Exhibit 10.2

(L)      make any material changes in its methods, practices, principles or policies of financial accounting, except as may be required under GAAP; or
(M) authorize or enter into any Contract or commitment with respect to any of the foregoing.
Section 5.02 . Access to Information. (a) From the date hereof until the Closing Date, Seller will (i) give Buyer, its counsel, financial advisors, auditors and other authorized representatives reasonable access to the personnel, books and records of Seller and its Subsidiaries relating to the ETFs Business, (ii) furnish to Buyer, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information relating to the ETFs Business as such Persons may reasonably request and (iii) instruct the employees, counsel and financial advisors of Seller and its Subsidiaries to cooperate with Buyer in its investigation of the ETFs Business. Any investigation pursuant to this ‎Section 5.02(a) shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of Seller and its Subsidiaries. No information or knowledge obtained in any investigation pursuant to this ‎Section 5.02(a) shall affect or be deemed to modify any representation or warranty made by any party hereunder.
(b)      From and after the Closing Date, upon reasonable notice and subject to applicable Laws relating to the exchange of information, Seller will promptly provide Buyer and its agents reasonable access to the books of account, financial and other records (including accountant’s work papers), information, employees and auditors of Seller and its Subsidiaries to the extent reasonably necessary for Buyer in connection with Buyer’s preparation of its annual and periodic public financial reporting obligations (including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K), any audit, investigation relating to the ETFs Business, dispute or litigation relating to the ETFs Business or any other reasonable business purpose relating to the ETFs Business including to the extent reasonably necessary to permit Buyer to determine any matter relating to its rights and obligations hereunder or to any period ending on or before the Closing Date; provided that any such access by Buyer shall not unreasonably interfere with the conduct of the business of Seller. Buyer shall bear all of the out-of-pocket costs and expenses (including attorneys’ fees, but excluding reimbursement for general overhead, salaries and employee benefits, and without prejudice to any indemnification rights under Article XI) reasonably incurred in connection with the foregoing. No information or knowledge obtained in any investigation pursuant to this ‎Section 5.02(b) shall affect or be deemed to modify any representation or warranty made by any party hereunder.
(c)      Without limiting the foregoing rights, Seller shall deliver to Buyer copies (or, if applicable, a knowledge transfer) of all know-how, processes, manuals, and other materials used by Seller and its Affiliates in the ETFs Business

56
    
Exhibit 10.2

and relating to the maintenance and operation of the indices utilized in the ETFs Business as of the Closing. 
(d)      Notwithstanding the foregoing, Buyer shall not have access to (i) materials entitled to legal privilege (or which could jeopardize the attorney-client privilege of Seller or its Affiliates), (ii) personnel records of Seller or its Subsidiaries (including the Transferred Entities) relating to individual performance or evaluation records, medical histories or other information which in Seller’s good faith opinion is sensitive or the disclosure of which could subject Seller or its Subsidiaries (including the Transferred Entities) to risk of liability or (iii) other information which in Seller’s good faith opinion could reasonably be expected to subject Seller or its Subsidiaries to liability. The parties shall endeavor in good faith to make appropriate substitute disclosure arrangements, if practicable, in a manner that does not give rise to any of the circumstances referred to in the preceding sentence.
(e)      Notwithstanding the foregoing, access to information with respect to Tax matters shall be provided as designated in ‎Section 8.05.
Section 5.03 . Non-Solicitation of Alternative Transactions. (a) Unless and until this Agreement will have been terminated in accordance with its terms, Seller shall not, and Seller shall cause its Affiliates not to, and shall cause its and its Affiliates’ officers, directors, employees, investment bankers, attorneys, accountants, consultants or other agents or advisors not to, directly or indirectly, (i) solicit, initiate or take any action to facilitate or encourage the submission of any proposal to acquire or purchase any capital stock of, or merger consolidation, combination, sale of assets, reorganization or similar transaction involving the ETFs Business, (ii) enter into or participate in any discussions or negotiations with or authorize any financial advisor or other Person to solicit or participate in discussions or negotiations with, furnish any non-public information relating to the ETFs Business (other than as to the existence of these provisions) or afford access to the business, employees, properties, assets, books or records of the ETFs Business to, otherwise knowingly cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by any Person other than Buyer and its Affiliates to make such a proposal, (iii) enter into any agreement with any party other than the Buyer and its Affiliates with respect to such a proposal, or (iv) authorize any of the foregoing actions.
(b)      Seller shall, and shall cause its Affiliates, to immediately terminate and cause to be terminated any and all existing discussions or negotiations with any Persons (other than Buyer and its Affiliates) conducted heretofore with respect to any of the foregoing actions described in ‎Section 5.03(a). Seller shall, and shall cause its Affiliates to, enforce their respective rights under, and shall not, release any third party from, the confidentiality and standstill provisions of any agreement to which Seller or its Affiliates is a party with respect to a potential sale of capital stock of, or merger, consolidation, combination, sale of assets, reorganization or similar transaction involving the ETFs Business and shall

57
    
Exhibit 10.2

promptly take all steps necessary to terminate any approval that may have been heretofore given under any such provisions authorizing any such third party to make any proposal regarding the foregoing.
Section 5.04 . Resignations. On or prior to the Closing Date, Seller will deliver to Buyer the resignations (with effect as of Closing) from their positions with any Transferred Entity of all officers of any Transferred Entity who will be employed by Seller or any of its Affiliates after the Closing Date.
Section 5.05 . Non-Solicit; Non-Competition. (a) As an inducement to Buyer to enter into this Agreement and to more effectively protect the value and goodwill of the ETFs Business, Seller hereby covenants and agrees that from the date hereof until the second anniversary of the Closing Date, it will not, and it shall cause its controlled Affiliates not to, directly or indirectly, solicit (including through internal job postings) or hire, or assist in the hiring of, or otherwise engage or assist in engaging any ETFs Business Employee as of the Closing Date; provided that general, non-targeted advertising (other than through internal job postings) or the use of an independent search firm that contacts ETFs Business Employees without direction or advice by Seller or its controlled Affiliates shall not be deemed to be direct or indirect solicitations. The foregoing prohibition shall not apply to any employee whose employment has been terminated by Buyer or its applicable Affiliate after the Closing.
(b)      As an inducement to Buyer to enter into this Agreement and to more effectively protect the value and goodwill of the ETFs Business, Seller covenants and agrees that, for a period of two years following the date hereof, Seller and its controlled Affiliates will not, directly or indirectly, (i) act as an investment adviser or sub-adviser for any exchange-traded funds listed in the United States, whether or not registered under the Investment Company Act, (ii) create a proprietary index for, or license a proprietary index to, any exchange-traded funds listed in the United States (whether or not registered under the Investment Company Act), whether directly or indirectly through the investment adviser or sub-advisor to such a fund, or (iii) acquire any equity interests of any person engaged in the activities prohibited by clauses (i) or (ii) (other than any person whose prohibited activities account for less than 10% of such person’s (or its parent company’s) consolidated revenues); provided, however , that Seller and its controlled Affiliates may each with respect to clause (iii) above only, (1) make investments of up to 5% in the equity of any publicly traded company engaged in such activities, (2) with respect to any controlled Affiliate of Seller that is an investment advisor, make and hold investments for investment advisory clients (other than clients who are controlled Affiliates of Seller) and (3) engage in investment banking and broker-dealer activities in the ordinary course of business.
(c)      Except as otherwise provided in the following sentence, if any provision contained in this ‎Section 5.05 shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this ‎Section 5.05, but this

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Exhibit 10.2

‎Section 5.05 shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. It is the intention of the parties that if any of the restrictions or covenants contained herein is held to be for a length of time which is not permitted by applicable Law, or in any way construed to be to any extent invalid, such provision shall not be construed to be null, void and of no effect, but to the extent such provision would be valid or enforceable under applicable Law, a court of competent jurisdiction shall construe and interpret or reform this ‎Section 5.05 to provide for a covenant having the maximum enforceable time period and other provisions (not greater than those contained herein) as shall be valid and enforceable under such applicable Law. Seller acknowledges that Buyer would be irreparably harmed by any breach of this ‎Section 5.05 and that there would be no adequate remedy at law or in damages to compensate Buyer for any such breach. Seller agrees that Buyer shall be entitled to injunctive relief requiring specific performance by Seller of this ‎Section 5.05, and Seller consents to the entry thereof.
Section 5.06. U.S. Person Certificate . Prior to the Closing, Seller shall deliver, or cause to be delivered, to Buyer a certificate stating that Seller is not a foreign person within the meaning of Section 1445(b)(2) of the Code.
Section 5.07. Trademarks; Tradenames . Except as otherwise set forth in the Index Data Agreement or ‎Section 5.07 of the Seller Disclosure Schedule, after the Closing, Seller and its Affiliates shall not use any of the Trademarks or Internet domain names owned by one or more of the Transferred Entities or used primarily in the ETFs Business.
Section 5.08. Credit Documents. Seller shall cause (i) the release, with effect as of not later than the Closing, of each of the Transferred Entities from its respective guaranty obligations under the GPIMH Credit Documents (as defined in Section 3.02 of the Seller Disclosure Schedule) and (ii) the termination, with effect as of not later than the Closing, of the liens under the GPIMH Credit Documents on the Membership Interests, the assets of each of the Transferred Entities and, if not then owned by the Transferred Entities, the other assets to be transferred to the Transferred Entities or the Buyer and its Subsidiaries as contemplated by Sections 2.02(b)(iii) and 7.11.
ARTICLE 6     
COVENANTS OF BUYER
Section 6.01 . Access to Information. (a) From and after the Closing Date, upon reasonable notice and subject to applicable Laws relating to the exchange of information, Buyer will promptly provide Seller and its agents reasonable access to its books of account, financial and other records (including accountant’s work papers), information, employees and auditors to the extent reasonably necessary to permit Seller to determine any matter relating to its rights and obligations hereunder or to any period ending on or before the Closing Date; provided that any such access by Seller shall not unreasonably interfere with the conduct of the

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business of Buyer. No information or knowledge obtained in any investigation pursuant to this ‎Section 6.01 shall affect or be deemed to modify any representation or warranty made by any party hereunder. Notwithstanding the foregoing, Seller shall not have access to (i) materials entitled to legal privilege (or which could jeopardize the attorney-client privilege of Buyer or its Affiliates), (ii) personnel records of Buyer or its Subsidiaries relating to individual performance or evaluation records, medical histories or other information which in Buyer’s good faith opinion is sensitive or the disclosure of which could subject Buyer or its Subsidiaries to risk of liability or (iii) other information which in Buyer’s good faith opinion could reasonably be expected to subject Buyer or its Subsidiaries to liability. The parties shall endeavor in good faith to make appropriate substitute disclosure arrangements, if practicable, in a manner that does not give rise to any of the circumstances referred to in the preceding sentence.
Section 6.02 . Trademarks; Tradenames. As soon as practicable after the Closing Date (or in the case of use by any ETF Fund or by Buyer with respect to the name of any ETF Fund, the date of the “Closing” as defined in the applicable Fund Reorganization Agreement) but in no event later than thirty (30) days thereafter (the “ Trademark Transition Period ”), Buyer shall, and shall cause each of its Affiliates (including each Transferred Entity) to, (i) cease any and all use of Seller’s or its Affiliates’ marks or names set forth on ‎Section 6.02 of the Seller Disclosure Schedule (collectively, the “ Seller Marks ”), (ii) remove, conceal, cover, redact and/or replace such Seller Marks from any and all materials and assets under the control or possession of Buyer or any of its Affiliates that contain the Seller Marks, and (iii) cause its name to be changed to such other name that does not include the Seller Marks and make all necessary filings and use commercially reasonable efforts to cause all applicable Governmental Authorities to change all applications, registrations and filings, including corporate names, seals and certificates of Buyer and its Affiliates such that they will not include any Seller Marks; provided that Buyer and its Affiliates may use the Seller Marks following the Trademark Transition Period solely to refer to the ETFs Business in a historical manner as required by Law or as required for the continued use following the Closing of the performance track records of the ETF Funds, including the Composites, in accordance with GIPS (or any successor standards to GIPS) and Law. Buyer acknowledges and agrees that, to the extent it or any of its Affiliates (including each Transferred Entity) continue to use any Seller Marks in connection with the conduct of the ETFs Business during the Trademark Transition Period or thereafter, Buyer shall, and shall cause its Affiliates to, include an express disclaimer in any and all applicable written materials or documents that the ETF Funds and the ETFs Business are no longer associated with Seller or any of its Affiliates. From and after the Closing, neither Buyer nor any of its Affiliates shall challenge the ownership, validity or enforceability of any Seller Marks.


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Exhibit 10.2

ARTICLE 7     
COVENANTS OF BUYER AND SELLER
Buyer and Seller agree that:
Section 7.01 . Reasonable Best Efforts; Further Assurances. (a) Subject to the terms and conditions of this Agreement, Buyer and Seller will use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable Law to consummate the transactions contemplated by this Agreement. Seller and Buyer agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement. Such actions shall include (i) preparing and filing as promptly as reasonably practicable all documentation to effect all necessary notices, reports, and other filings and to obtain as promptly as reasonably practicable all consents, registrations, approvals, waivers, orders, exemptions, Permits and authorizations necessary or advisable to be obtained from any third party or Government Entity in order to consummate the transactions contemplated by this Agreement and (ii) taking all actions reasonably necessary in order to comply with or satisfy the requirements of any applicable Law or other requirements of any Government Entity that would prevent the consummation of the transactions contemplated by this Agreement.
(b)      In furtherance and not in limitation of the foregoing, each of Buyer and Seller shall make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated hereby as promptly as practicable and to supply as promptly as practicable any additional information and documentary material that may be requested pursuant to the HSR Act and to take all other actions necessary to cause the expiration or termination of the applicable waiting periods under the HSR Act as soon as practicable.
(c)      Seller and Buyer shall cooperate with each other in connection with the making of all such filings. Seller and Buyer shall use their respective reasonable best efforts to furnish to each other all information required for any application or other filing to be made pursuant to the rules and regulations of any applicable Law in connection with the transactions contemplated by this Agreement. Neither Seller nor Buyer may participate or agree to participate in any substantive meeting, telephone call or discussion with any Government Entity in connection with the filings required under the HSR Act in connection with the transactions contemplated by this Agreement unless it consults with the other party in advance (to the extent not prohibited by such Government Entity) and, to the extent not prohibited by such Government Entity, gives the other party the opportunity to attend such meeting, telephone call or discussion. The parties hereto will consult and cooperate with one another, and consider in good faith the views of one another, in connection with, and provide to the other parties in advance, any analyses, appearances, presentations, memoranda, briefs, arguments,

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Exhibit 10.2

opinions and proposals made or submitted by or on behalf of any party hereto in connection with proceedings under or relating to any Antitrust Law. Notwithstanding the foregoing, Seller and Buyer may, as each deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other under this ‎Section 7.01(c) as “Antitrust Counsel Only Material.” Such materials and the information contained therein shall be given only to the outside antitrust counsel of the recipient and will not be disclosed by such outside counsel to employees, officers or directors of the recipient unless express permission is obtained in advance from the source of the materials (Buyer or Seller, as the case may be) or its legal counsel.
Section 7.02 . Certain Filings. Seller and Buyer shall cooperate with one another (i) in determining whether any action by or in respect of, or filing with, any Government Entity is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material Contracts, in connection with the consummation of the transactions contemplated by this Agreement and (ii) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers.
Section 7.03 . Public Announcements. The parties agree to consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except for any press releases and public announcements the making of which may be required by applicable Law or any listing agreement with any national securities exchange, will not issue any such press release or make any such public statement prior to such consultation. As of the date hereof, the parties shall have mutually agreed (each acting reasonably) on the form of any press release by Buyer or Seller or any of their respective Affiliates announcing (i) the execution and delivery of this Agreement and (ii) the transactions contemplated hereby.
Section 7.04 . Intercompany Accounts and Agreements. All intercompany accounts between the Seller or its Subsidiaries, on the one hand, and the Transferred Entities (taking into account the Restructuring) or the ETF Funds, on the other hand, existing prior to the Closing shall be settled (irrespective of the terms of payment of such intercompany accounts) in the manner provided in this Section 7.04. At least two Business Days prior to the Closing, Seller shall prepare and deliver to Buyer a statement setting out in reasonable detail the calculation of all such intercompany account balances based upon the latest available financial information as of such date and, to the extent requested by Buyer, provide Buyer with supporting documentation to verify the underlying intercompany charges and transactions. All such intercompany account balances, and any balances arising after such calculation but on or before the Closing, shall be paid in full prior to the Closing. Except (i) to the extent necessary for the provision of any services as contemplated in any Ancillary Agreement, (ii) as set forth on Section 7.04 of the Seller Disclosure Schedule or (iii) as otherwise mutually agreed in writing by Seller and Buyer, all Contracts between Seller or its Subsidiaries, on the one hand,

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Exhibit 10.2

and the ETFs Business or the ETF Funds, on the other hand, are hereby terminated effective immediately prior to the Closing and without further liability or obligation (contingent or otherwise) thereunder.
Section 7.05. ETF Fund Consents.
(a)      Generally .
(i)      Subject to the specific requirements of ‎Section 7.05(b) through ‎Section 7.05(d), Seller agrees to use, and to cause each of its Subsidiaries to use, its reasonable best efforts to obtain the consents and approvals necessary to satisfy prior to the Closing Date the Assignment Requirements with respect to each Existing ETF Contract (other than the Maturing ETFs). Buyer agrees to use and to cause each of its Subsidiaries to use its reasonable best efforts to cooperate with Seller and its Subsidiaries in their efforts so to satisfy the Assignment Requirements with respect to each Existing ETF Contract (and to obtain the “interim” new advisory contracts described in ‎Section 7.05(b)(i)(B)). In the event that any such Assignment Requirements are not satisfied on or prior to the Closing Date, following the Closing Date, Buyer and Seller shall use (and shall cause their respective Affiliates to use) their respective reasonable best efforts to satisfy such Assignment Requirements as soon as practicable and in any event within 180 days after the Closing Date. For any Contingent Account that exists at the Closing Measurement Date, Buyer shall use its reasonable best efforts to cause such Contingent Account not to terminate the applicable Existing ETF Contract prior to the end of the True-Up Period. For each ETF Fund, Buyer shall, on a timely basis, use its commercially reasonable best efforts to ensure that the respective Buyer Fund Series (if any) and the requisite investment advisers and other service providers thereto are in each case properly organized and have the requisite regulatory approvals and registrations to enable the Fund Mergers and CurrencyShares Sponsor Continuations to occur by Closing.
(ii)      Each of Buyer and Seller agrees to provide promptly in writing all information concerning itself and its Affiliates required to be included in the proxy solicitation, or other consent solicitation, materials or government filings contemplated by this ‎Section 7.05 (including the information required for the Fund Merger Proxy Statement/Prospectuses under the Exchange Act or the Investment Company Act or under other applicable Laws). Each of Buyer and Seller agrees promptly to correct such information if and to the extent that such information becomes false or misleading in any material respect.
(iii)      From and after the date hereof and until the end of the True-Up Period, Seller and Buyer shall communicate on a regular basis to stay apprised of such efforts to satisfy the Assignment Requirements and, upon Buyer’s reasonable request, Seller shall make available to Buyer

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Exhibit 10.2

copies of all executed client consents and other documents evidencing satisfaction of applicable Assignment Requirements.
(iv)      Notwithstanding anything herein to the contrary, none of Seller, Buyer or any of their respective Affiliates shall have any obligation under this Agreement to pay any money or other consideration beyond a de minimis review charge to any Person that is a party to an Existing ETF Contract or to initiate any claim or proceeding against any such Person in order to obtain any consent, approval or New ETF Contract necessary to satisfy any Assignment Requirement (except, for the avoidance of doubt, the sharing of certain expenses by Seller and Buyer contemplated by ‎Section 13.03).
(b)      40 Act ETF Funds. With respect to each 40 Act ETF Fund:
(i)      Seller agrees to use, and to cause each of its Affiliates to use, reasonable best efforts to obtain (A) the required consents and approvals (including such approvals by the ETF Fund Board and shareholders of such 40 Act ETF Fund) necessary for a Fund Merger and (B) all required approvals by the ETF Fund Board of such 40 Act ETF Fund of an “interim” new advisory contract between such 40 Act ETF Fund and a Subsidiary of Buyer pursuant to Rule 15a-4 thereunder (but (1) only to the extent all required consents and approvals for such Fund Merger are not obtained prior to Closing or (2) it is reasonably expected that such Fund Merger will not close at the time of the Closing), including by providing to the applicable board of directors or board of trustees (or similar body) all information relating to such party and its Affiliates that is necessary and/or reasonably requested by such board to enable it to evaluate the foregoing.
(ii)      Seller shall use its reasonable best efforts to cause such 40 Act ETF Fund (to the extent shareholder approval shall be required for such Fund Merger) to call a special meeting of the shareholders of such 40 Act ETF Fund to be held as soon as reasonably practicable after the date of this Agreement for purposes of obtaining the requisite approval of such shareholders for such Fund Merger, as applicable and only to the extent required. In connection therewith, (A) with respect to each 40 Act ETF Fund, Buyer will use (or will cause an Affiliate to use) its reasonable best efforts to cause the Buyer Fund and the Buyer Fund Series that is the party to such 40 Act ETF Fund’s proposed Fund Merger to prepare and to file with the SEC (to the extent such filing is required) all securities registrations statements and prospectuses and proxy solicitation materials necessary to comply in all material respects with the applicable provisions of the Securities Act, Section 14 of the Exchange Act and Section 20 of the Investment Company Act, including a securities registration statement on SEC Form N-14 (or successor form thereto) containing a joint proxy statement and prospectus (a “ Fund Merger Proxy Statement/

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Exhibit 10.2

Prospectus ”), (B) Seller will use (or will cause an Affiliate to use) its reasonable best efforts to cause each such 40 Act ETF Fund (1) to mail such proxy solicitation materials (including, as applicable, a Fund Merger Proxy Statement/Prospectus) to the shareholders of such 40 Act ETF Fund as promptly as practicable after review by the SEC and (2) as soon as practicable following the mailing of such proxy solicitation materials, submit, or cause to be submitted, to the shareholders of such 40 Act ETF Fund, for a vote at such shareholders meeting, the proposal described in the first sentence of this ‎Section 7.05(b)(ii). For the avoidance of doubt, the Existing ETF Contract of each 40 Act ETF Fund shall be assigned to Buyer or one of its subsidiaries at Closing in the event that the Assignment Requirements with respect to such 40 Act ETF Fund have not been satisfied as of Closing, which purported assignment will have the effect of terminating such Existing ETF Contracts and thereby permit the 40 Act ETF Fund board to appoint interim adviser(s) pursuant to Rule 15a-4(b)(2) of the Investment Company Act.
(iii)      Buyer and Seller agree that consent for any Existing ETF Contract with a 40 Act ETF Fund shall be deemed given for all purposes under this Agreement only if a Fund Merger has been approved, to the extent required, by the ETF Fund Board of such ETF Fund under ‎Section 7.05(b)(i)(A) and by the shareholders of the applicable ETF Fund in accordance with ‎Section 7.05(b)(ii) and applicable Law.
(c)      CurrencyShares Funds . With respect to each CurrencyShares Fund, Seller agrees to notify the trustee of such CurrencyShares Fund of the transactions contemplated by this Agreement and the intention of the parties to effect a CurrencyShares Sponsor Continuation in respect of such CurrencyShares Fund. Buyer and Seller agree that the Assignment Requirements with respect to each CurrencyShares Fund shall be deemed satisfied for all purposes hereunder.
(d)      In connection with the consent solicitation provided for in this ‎Section 7.05, (i) Buyer shall be provided a reasonable opportunity to review and comment on all consent materials to be used by Seller or its Affiliates prior to distribution and (ii) Seller shall be provided a reasonable opportunity to review and comment on each Fund Merger Proxy Statement/Prospectus. Seller and its Affiliates shall promptly upon their receipt make available to Buyer copies of any and all substantive correspondence between it and the ETF Funds, their boards of trustees or investors, or representatives or counsel thereof relating to the consent solicitation provided for in this ‎Section 7.05.
(e)      Notwithstanding anything else contained in this Agreement, with respect to any 40 Act ETF Fund for which it is contemplated under this Agreement that the Assignment Requirement is to be satisfied by a Fund Merger involving such 40 Act ETF Fund, in the event (i) that such 40 Act ETF Fund’s ETF Fund Board provides the approvals required of it to proceed with the Fund Merger but the Buyer Fund’s board of trustees fails to provide the approvals

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Exhibit 10.2

required of it to proceed with the Fund Merger in a timely manner or (ii) the Buyer Fund or the 40 Act ETF Fund requires unreasonable material changes to the Form of Fund Reorganization Agreement not acceptable to such 40 Act ETF Fund or Buyer Fund, as the case may be, or the Buyer Fund or the 40 Act ETF Fund, as the case may be, refuses to accept reasonable changes thereto proposed by such 40 Act ETF Fund or Buyer Fund, then in either case the parties agree that, with respect to such 40 Act ETF Fund, the transactions contemplated hereby will be executed (and the Assignment Requirement will be satisfied) without a Fund Merger by obtaining 40 Act ETF Fund board and shareholder approval under applicable Law as necessary to permit such 40 Act ETF Fund’s Existing ETF Contract to be replaced with a New ETF Contract with a Subsidiary of Buyer.
Section 7.06 . Section 15(f). (a) Buyer acknowledges and agrees that the transactions contemplated by this Agreement are intended to qualify for the treatment described in Section 15(f) of the Investment Company Act. In this regard, Buyer shall, and from and after the Closing Date shall, to the extent within its control, cause the ETFs Business to comply with the conditions of Section 15(f) of the Investment Company Act in respect of each 40 Act ETF Fund, including (i) by ensuring that for a period of three years after the Closing Date, at least 75% of the board of trustees or board of directors (if any), as the case may be, of such ETF Fund or any successor thereto (including by reorganization or otherwise) are not “interested persons” (as that term is defined under applicable provisions of the Investment Company Act and interpreted by the SEC) of (A) any investment adviser of such ETF Fund after the Closing or (B) the investment adviser of such ETF Fund prior to the Closing; and (ii) by not imposing or seeking to impose for a period of two years after the Closing Date, any “unfair burden” (as that term is defined in Section 15(f) of the Investment Company Act and interpreted by the SEC) on such ETF Fund.
(b)      In complying with ‎Section 7.06(a)(i), Buyer shall, and from and after the Closing Date shall, to the extent within its control, cause the ETFs Business to (i) cause any employee, officer, director or agent of Buyer, any Subsidiary of Buyer or any of their respective “affiliated persons” (as that term is defined under applicable provisions of the Investment Company Act and interpreted by the SEC) who shall be a trustee or director of any 40 Act ETF Fund, any Buyer Fund or any successor thereto (including by reorganization or otherwise) to resign when required to maintain the percentage referred to in ‎Section 7.06(a)(i) and (ii) ensure that vacancies on the board of trustees or board of directors, as the case may be, of any such 40 Act ETF Fund, Buyer Fund or successor thereto (including by reorganization or otherwise) will be filled by a Person who is not an “interested person” (as that term is defined under applicable provisions of the Investment Company Act and interpreted by the SEC) of such an investment adviser referred to in ‎Section 7.06(a)(i)(A) or (B), who has been selected and proposed for election by a majority of the trustees or directors who are not such interested persons, and who has been elected by shareholders in accordance with Section 16(b) of the Investment Company Act.

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Exhibit 10.2

(c)      For a period of three years after the Closing Date, Buyer shall not engage, and shall use reasonable best efforts to cause its Affiliates not to engage, in any transaction that would constitute an “assignment” (as that term is defined under applicable provisions of the Investment Company Act and interpreted by the SEC) to a third party of any investment advisory contract between Buyer or any of its Affiliates, on the one hand, and any 40 Act ETF Fund or Buyer Fund, on the other hand, without first obtaining from the counterparty to such transaction a covenant in all material respects comparable to that contained in this Section 7.06.
(d)      None of Buyer or any of its affiliated persons (as that term is defined under applicable provisions of the Investment Company Act and interpreted by the SEC) has, and Buyer shall ensure that no such persons have, any express or implied understanding or arrangement which would reasonably be expected to impose an “unfair burden” (as that term is defined in Section 15(f) of the Investment Company Act and interpreted by the SEC) on any ETF Fund or any Buyer Fund as a result of the transactions contemplated hereby or which would in any way violate, or otherwise make unavailable to Seller, Section 15(f) of the Investment Company Act.
Section 7.07 . Certain Post-Closing Filings. Following the Closing Date, Buyer agrees to, or to cause its applicable Subsidiaries to, make all necessary filings relating to the consummation of the transactions contemplated by this Agreement that may be required to be made with any applicable Government Entity.
Section 7.08 . Notices of Certain Events. Each party shall promptly notify the other party of:
(a)      any notice or other communication received by such party from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;
(b)      any notice or other communication from any Government Entity received by such party in connection with the transactions contemplated by this Agreement;
(c)      any Legal Proceedings commenced relating to such party or its Affiliates that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to ‎Section 3.07 or ‎Section 4.13 as applicable;
(d)      any inaccuracy of any representation or warranty contained in this Agreement at any time during the term hereof that could reasonably be expected to cause the conditions set forth in ‎Section 10.02(b) or ‎Section 10.03(b) not to be satisfied; and
(e)      any failure of that party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided that the delivery of any notice pursuant to this ‎Section 7.08 shall not limit or

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Exhibit 10.2

otherwise affect the remedies available hereunder to the party receiving such notice.
Section 7.09 . WARN Act. Buyer and Seller shall cooperate in good faith to determine whether any notification may be required under the U.S. Worker Adjustment and Retraining Notification Act or any other worker notification Laws applicable to any ETFs Business Employee arising as a result of the transactions contemplated by this Agreement. Buyer shall assume all obligations and liabilities for the provision of notice or payment in lieu of notice or any applicable penalties with respect to the Transferred Employees under such worker notification laws arising as a result of actions taken by Buyer on or after the Closing Date. Seller shall retain or assume all obligations and liabilities for the provision of notice or payment in lieu of notice or any applicable penalties with respect to the ETFs Business Employees under such worker notification laws arising as a result of actions taken by Seller or its Affiliates on or prior to the Closing Date. Seller (or its applicable Affiliate) shall promptly provide Buyer with such information as is reasonably requested by Buyer in order to determine whether any actions taken by Seller or its Affiliates prior to the Closing Date will, if aggregated with actions that may be taken by Buyer or its Affiliates after the Closing Date, require the provision of notice or payment in lieu of notice to the Transferred Employees.
Section 7.10 . Confidentiality.
(a)      Prior to the Closing Date and after any termination of this Agreement, (i) Buyer and its Affiliates will hold in confidence, pursuant and subject to the terms of the Confidentiality Agreement (which the parties agree shall remain in full force and effect until one year after the date of termination of this Agreement), all documents and information concerning the ETFs Business (including documents and information relating to clients, prospective clients, distributors and strategic business partners) furnished to, or prepared by, Buyer, its Affiliates or any of their respective officers, directors, employees, accountants, counsel, consultants, advisors and agents and other representatives in connection with the transactions contemplated by this Agreement and the Ancillary Agreements and (ii) Seller and its Affiliates will hold in confidence, pursuant and subject to the terms of the Confidentiality Agreement, all documents and information concerning Buyer and its Affiliates (including documents and information relating to clients, prospective clients, distributors and strategic business partners) furnished to, or prepared by, Seller, its Affiliates or any of their respective officers, directors, employees, accountants, counsel, consultants, advisors and agents and other representatives in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.
(b)      From and after the Closing, Seller shall, and shall cause its Affiliates and its and their officers, directors, employees, consultants, agents and advisors to use all reasonable efforts to, keep confidential (other than as may be necessary to enforce its rights hereunder) and not use (other than as may be necessary to

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Exhibit 10.2

enforce its rights hereunder or as contemplated by Section 2.02(b)(3)) any and all non-public information (i) relating to Buyer and its Affiliates that becomes known to Seller or its Affiliates or its or their officers, directors, employees, consultants, agents or advisors in connection with or as a result of the transactions contemplated by this Agreement and the Ancillary Agreements or (ii) to the extent relating to the ETF Business, including its business and financial condition, that is not generally known to the general public; provided that, subject to the compliance by Seller and its Affiliates with the other provisions of this Agreement, this ‎Section 7.10(b) shall not prohibit the use by Seller and its Affiliates after the Closing of information relating to the ETFs Business that as of the Closing Date was, in addition to being used in connection with the ETFs Business also used by Seller and its Affiliates in connection with businesses other than the ETFs Business.
(c)      Notwithstanding anything to the contrary in ‎Section 7.10(b) if any of Seller and its Affiliates is requested or required by oral questions, interrogatories, requests for information or documents, subpoenas, civil investigative demand or similar process to disclose any such confidential information of Buyer and its Affiliates, or any of Seller and its Affiliates determines, based on the advice of counsel, that any such disclosure is required under applicable Law or applicable rules or regulations of any national securities exchange, Seller or its applicable Affiliate will, to the extent permitted by applicable Law, provide Buyer with prior written notice thereof promptly (and in any event within two business days) after receipt or such request or determination so that Buyer may seek a protective order or other appropriate remedy and/or waive Seller’s compliance with the provisions of ‎Section 7.10(b); provided that no such notice shall be required to be given in the case of routine examinations by any regulator that are not specifically directed at such confidential information. Seller agrees that it will, at Buyer’s request and sole expense, exercise reasonable efforts to assist Buyer in obtaining such protective order or other appropriate relief. If such protective order or other remedy is denied, and Seller or any of its Affiliates are nonetheless legally compelled to disclose such information, Seller or its Affiliate, as the case may be, will furnish only that portion of the confidential information that is legally required, based on advice of Seller’s counsel, and will exercise its reasonable efforts at Buyer’s sole expense to obtain reliable assurances that confidential treatment will be accorded the confidential information. Non-public information for purposes of ‎Section 7.10(b) shall not include any information that (A) was publicly available prior to the date hereof or hereafter becomes publicly available without any violation of this Agreement on the part of Seller or its Affiliates; (B) in the case of information of the sort specified in Section 7.10(b)(i), was available to Seller or its Affiliates on a non-confidential basis prior to its disclosure by Buyer; provided that the source of such information was not, to the knowledge of Seller and its Affiliates, subject to any legally binding obligation to the Buyer to keep such information confidential; (C) becomes available after the Closing to Seller or its Affiliates on a non-confidential basis from a person other than the Buyer who is not, to the Knowledge of Seller and its Affiliates, subject to any legally binding obligation to the Buyer to keep such information confidential, and

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Exhibit 10.2

other than from any such non-public information previously in the possession of Seller or its Affiliates or retained by Seller or its Affiliates pursuant hereto or (D) was or is independently developed by Seller or its Affiliates without reference to such non-public information
Section 7.11. Restructuring. At or prior to the Closing Seller shall, on the terms and subject to the conditions set forth herein, cause the assets primarily used in or relating to the ETFs Business to be contributed to the Transferred Entities (or otherwise transferred to Buyer or its Subsidiaries) pursuant to the Restructuring. In connection with the foregoing, Seller shall (i) use commercially reasonable efforts to obtain any consents, waivers or approvals of any third parties that are necessary or appropriate to assign the Assigned Contracts to the Transferred Entities (or otherwise to Buyer or its Subsidiaries) at or prior to the Closing and (ii) enter into the Index Data Agreement at Closing and deliver the Transferred Entity Records, Other ETFs Business Records and other information and materials to be provided to Buyer under ‎Section 5.02(c). Seller shall not transfer to either Transferred Entity or Buyer any liabilities or obligations (whether known, absolute, accrued, contingent or otherwise and whether due or to become due), other than executory obligations under the Assigned Contracts that are validly assigned to the Transferred Entities (or otherwise to Buyer or its Subsidiaries) and with respect to which the applicable Seller affiliated entity is in compliance with the terms thereof. The foregoing shall be effected pursuant to customary documentation reasonably satisfactory to Buyer. At Seller’s request, Buyer shall reasonably cooperate in connection with Seller obtaining such consents, waivers or approvals; provided, however , that such cooperation shall not include any obligation of Buyer to expend money or grant any accommodation (financial or otherwise) to any third party in connection with obtaining such consents, waivers or approvals. In the event that the parties are not able to secure any third-party consent required for the transfer of an Assigned Contract, the parties will cooperate to enter into a mutually agreeable arrangement, if commercially practical, under which Buyer would obtain the benefits and assume the obligations under such Assigned Contract(s).
Section 7.12.     Pro-Ration. It is the intention of the parties that Seller will operate the ETFs Business for its own account until the Closing, and that Buyer shall operate the ETFs Business for its own account after the Closing Date. Thus, except as otherwise specifically provided in this Agreement, certain items of income and expense that relate to the ETFs Business shall be prorated as provided in this ‎Section 7.12 and in accordance with the procedures set forth in ‎Section 7.12 of the Seller Disclosure Schedule. Those items being prorated will be handled at the Closing as an adjustment to the Purchase Price, or if not able to be calculated, as promptly as practicable thereafter, unless otherwise agreed by the parties hereto. For purposes of this Agreement, items of proration and other adjustments to be prorated shall consist of: (i) wages, salaries and employee compensation, benefits and expenses, including with respect to any deferred compensation (provided that accruals in respect of Bonus Amounts shall be adjusted only through the provisions contained herein relating to the defined term

70
    
Exhibit 10.2

“Bonus Accrual,” and in the event of any conflict between this Section 7.12 and Article IX, Article IX shall control); (ii) prepaid expenses and expenses that have been incurred but have not been paid, in each case relating to Assigned Contracts validly assigned to one of the Transferred Entities (or otherwise to Buyer or its Subsidiaries) or Contracts otherwise with the Transferred Entities; and (iii) advisory, sub-advisory, administrative and other management fees payable after giving effect to and taking into account any fee or expense waiver, rebate or cap, reimbursement obligation or similar offset, any amounts payable to a sub-adviser that is not a part of the ETFs Business (including any such amount deducted directly by or on behalf of an ETF Fund from the fee otherwise payable by such ETF Fund to the ETFs Business under the applicable Existing ETF Contract), and any amounts payable in respect of revenue sharing and licensing arrangements (other than license fees to the extent actually born by the applicable ETF Fund) relating to the ETF Funds.
ARTICLE 8     
TAX MATTERS
Section 8.01. Allocation of Taxes . Except as provided in ‎Section 8.03 with respect to Apportioned Obligations, (i) Seller is responsible for and will timely pay any (A) Taxes of the Transferred Entities or arising or resulting from the conduct of and the operation of the ETFs Business, attributable, in each case, to any Pre-Closing Tax Periods, (B) Taxes of any other Person for which any Transferred Entity is liable under Treas. Reg. Section 1.1502-6 (or any similar provision of U.S. state or local or foreign Law) or as transferee or successor, (C) Taxes or Damages arising out of or relating to any breach of any representation or warranty contained in ‎Section 3.12(f), (D) Taxes arising out of or relating to any breach of any covenant or agreement of Seller contained in this ‎Article 8 and (E) any costs and expenses, including reasonable legal fees and expenses attributable to any item described in clauses (A) through (D); and (ii) Buyer is responsible for and will timely pay any Taxes of the Transferred Entities or arising or resulting from the conduct of and the operation of the ETFs Business, attributable, in each case, to any Post-Closing Tax Periods.
Section 8.02. Straddle Period . Seller will prepare in accordance with past practice and file all Tax Returns required to be filed for any Pre-Closing Tax Period with respect to the Transferred Entities and the ETFs Business, including such Tax Returns that are required to be filed after the Closing Date, other than any Tax Return required to be filed for a Straddle Period. With respect to each such Tax Return filed for the Transferred Entities, Seller will provide Buyer with a copy of each such Tax Return for review and comment (such comments not to be unreasonably rejected), no later than twenty (20) days prior to the due date thereof. Seller will properly prepare and file such Tax Returns no later than the due dates thereof, as such dates may be extended, to the extent permitted by applicable Law. Seller will pay all Taxes and other payments required to be paid for periods covered by such Tax Returns at the time such Tax Returns are filed. Buyer will prepare and file all Tax Returns required to be filed for any Post-

71
    
Exhibit 10.2

Closing Tax Period and any Straddle Period (or portion thereof) for which Seller is not required to file a Tax Return pursuant to this ‎Section 8.02 with respect to the Transferred Entities and the ETFs Business. In the event that Seller, on the one hand, or Buyer, on the other hand, is liable pursuant to this ‎Section 8.02 for any Taxes paid by the other party with respect to any Tax Return, reimbursement shall be made within ten (10) days after receipt of a request for such reimbursement and documentation reasonably evidencing such payment obligation.
Section 8.03. Apportioned Obligations . All real property taxes, personal property taxes and similar ad valorem obligations levied with respect to the Transferred Entities or the ETFs Business for a taxable period which includes (but does not end on) the Closing Date (collectively, the “ Apportioned Obligations ”) shall be apportioned between Seller and Buyer based on the number of days of such taxable period included in the Pre-Closing Tax Period and the Post-Closing Tax Period. Seller shall be liable for the proportionate amount of such taxes that is attributable to the Pre-Closing Tax Period, and Buyer shall be liable for the proportionate amount of such taxes that is attributable to the Post-Closing Tax Period. Apportioned Obligations shall be timely paid, and all applicable filings, reports and returns shall be filed, by Buyer or Seller as provided by applicable Law, provided that the paying party shall be entitled to reimbursement from the non-paying party in accordance with this ‎Section 8.03. Upon payment of any such Apportioned Obligation, the paying party shall present a statement to the non-paying party setting forth the amount of reimbursement to which the paying party is entitled under this ‎Section 8.03, together with such supporting evidence as is reasonably necessary to calculate the amount to be reimbursed. The non-paying party shall make such reimbursement promptly but in no event later than ten (10) days after the presentation of such statement.
Section 8.04. Transfer Taxes . All excise, sales, use, value added, registration stamp, recording, documentary, conveyancing, transfer, and similar Taxes, levies, charges and fees (collectively, “ Transfer Taxes ”) incurred in connection with the transactions contemplated by this Agreement shall be borne equally by Buyer, on the one hand, and Seller, on the other hand. The party required to file any Tax Returns relating to Transfer Taxes as provided by applicable Law, shall timely prepare and file such Tax Returns and shall provide the other party with a copy of such Tax Returns and proof of remittance of such Transfer Taxes within ten (10) days after such filing and remittance. Buyer and Seller shall cooperate in the timely completion and filing of all such Tax Returns.





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Exhibit 10.2

Section 8.05. Cooperation on Tax Matters . Buyer and Seller shall cooperate, as and to the extent reasonably requested by such other Party, in connection with preparing and filing any Tax Return, any inquiry, investigation, claim assessment, audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and, upon such other Party’s request, the provision of records and information that are reasonably relevant to any such inquiry, investigation, claim assessment, audit, litigation or other proceeding. Buyer and Seller (to the extent applicable) agree to (i) retain all books and records with respect to Tax matters relating to any Pre-Closing Tax Period, and to abide by all record retention agreements entered into with any Governmental Authority and (ii) use commercially reasonable efforts to give such other Party reasonable written notice prior to destroying or discarding any such books and records and, if such other Party so requests, Buyer and the Seller, as the case may be, shall allow such other Party to make copies of or take possession of such books and records.
Section 8.06. Post-Closing Actions . Buyer and its Affiliates shall not, without the prior written consent of the Seller (not to be unreasonably withheld, delayed or conditioned), amend, re-file, revoke or otherwise modify any Tax Return or Tax election with respect to a Transferred Entity that would be effective for any Pre-Closing Tax Period, except (i) to the extent required by applicable Law or (ii) if such amendment, re-filing or modification could not reasonably be expected to result in an increase in Taxes for any Pre-Closing Tax Period or an indemnification obligation of Seller pursuant to ‎Section 11.02.
Section 8.07. Termination of Tax Sharing Agreements . Any and all existing Tax sharing agreements or similar contracts to which any of the Transferred Entities are a party (other than those solely among the Transferred Entities) shall be terminated at or prior to the Closing and no Transferred Entity shall have any further rights or obligations thereunder with respect to any other party thereto.
ARTICLE 9     
EMPLOYEE MATTERS AND BENEFITS
Section 9.01. ETFs Business Employees .
(a)      Identified Business Employees . Buyer shall, not less than 10 Business Days prior to the Closing Date, identify each ETFs Business Employee which it would like to employ, and which will be set forth on ‎Section 9.01(a) of the Seller Disclosure Schedule (each, an “ Identified Business Employee ”). Prior to the Closing Date, Seller shall update ‎Section 9.01(a) of the Seller Disclosure Schedule to (i) delete any such employee who should no longer be an Identified Business Employee because Buyer provides written direction to make such deletion, and (ii) add any ETFs Business Employee who becomes an Identified Business Employee by written direction of Buyer. Immediately prior to the Closing Date, Seller shall, and shall take all necessary actions to (or cause any of its Subsidiaries, as applicable, to) transfer the employment of each Identified

73
    
Exhibit 10.2

Business Employee to a Transferred Entity; provided that, if Seller reasonably determines in good faith that the employment of any such Identified Business Employee cannot be transferred to a Transferred Entity on or prior to the Closing Date because of restrictions imposed by applicable Law or if such Identified Business Employee is located in India (each such employee, a “ Non-Transferred Business Employee ”), (i) Seller shall notify Buyer at least 5 Business Days prior to the Closing Date, (ii) Buyer shall (or shall cause one of its Subsidiaries to) make an offer of employment to such Non-Transferred Business Employee on terms consistent with this ‎Article 9 and (iii) Seller and Buyer shall cooperate to cause such Non-Transferred Business Employee to become Employed by Buyer or one of its Subsidiaries on, or as soon as reasonably practicable following, the Closing Date. Each Identified Business Employee who is transferred, or who accepts an offer of employment in the case of a Non-Transferred Business Employee, according to this ‎Section 9.01(a) and who continues or commences, as applicable, active employment with Buyer or one of its Subsidiaries (including, after the Closing, a Transferred Entity) as of his or her Transfer Date (as defined below) shall be referred to as a “ Transferred Employee ”).
(b)      Transfer Dates. The employment of Transferred Employees with Buyer or one of its Subsidiaries (including the Transferred Entities), as applicable, shall be effective as of the Closing Date, except that in the case of a Non-Transferred Business Employee, such employment shall be effective on the date such employee commences employment with the Buyer or one of its Subsidiaries. The date on which a Transferred Employee’s employment with Buyer or one of its Subsidiaries, as applicable, becomes effective is hereafter referred to as that Transferred Employee’s “ Transfer Date .”
(c)      Updating of ETFs Business Employee Information List . Seller shall provide Buyer, not later than the tenth day of each month prior to the Closing Date, with an updated ETFs Business Employee Information List that (i) contains the information required under Section 3.13(e) with respect to each individual whose information was not previously set forth on the ETFs Business Employee Information List and who became an ETFs Business Employee during the preceding month due to the mutual agreement of Seller and Buyer, or as otherwise indicated by the Buyer in writing to the Seller as provided for in the definition of ETFs Business Employee, and (ii) indicates each individual who was previously set forth on the ETFs Business Employee Information List and who is no longer an ETFs Business Employee. Seller shall provide Buyer with an updated ETFs Business Employee Information List at least 5 days prior to the Closing Date to reflect the required information as of the Closing Date, including the most recent fiscal year Bonus Amounts, to the extent such amounts have been paid or determined by the Seller in the ordinary course of business consistent with past practice.
(d)      Severance . With respect to any ETFs Business Employee who does not become a Transferred Employee (each, a “ Retained Employee ”) and whose employment with Seller and its Subsidiaries is terminated by Seller or its

74
    
Exhibit 10.2

Subsidiaries during the 60 day period commencing on the Closing Date (or with respect to any Retained Employee who is providing transition services pursuant to the Transition Services Agreement, during the six (6) month period commencing on the Closing Date) (the 60 day period together or the six month period, as applicable, the “ Shared Severance Window ”), Buyer and Seller shall each be responsible for 50% of any liabilities under a severance formula mutually agreed in writing by the Buyer and the Seller at least 20 Business Days prior to the Closing Date (the “ Transaction Severance Policy ”). Other than with regard to the Transaction Severance Policy, Seller shall retain responsibility for any retention bonus, guaranteed bonus or other termination or similar payments or benefits (collectively, “Severance Benefits” ) that may be due to any Transferred Employee under any Benefit and Compensation Arrangement, consistent with the provisions of Section 9.02(g). To the extent applicable, any liability for Severance Benefits and the Transaction Severance Policy for any Retained Employee terminated after the Shared Severance Window shall be the responsibility of Seller and its Subsidiaries.
Section 9.02. Employee Matters .
(a)      Continuation of Compensation and Benefits . For a period of not less than one year following the Closing Date, Buyer shall, or shall cause one of its Subsidiaries to, provide to each Transferred Employee (i) a base salary or wage rate that is no less than the base salary or wage rate provided to such Transferred Employee by Seller and its Subsidiaries immediately prior to the Closing Date and (ii) welfare, retirement and other employee benefits that are substantially comparable to the welfare, retirement and other employee benefits provided to employees of Buyer and its Subsidiaries who are similarly situated to such Transferred Employee.
(b)      Variable Incentive Compensation. Buyer shall be responsible for the payment of annual variable incentive compensation to the Transferred Employees due in respect of the fiscal year in which the Closing takes place (the “ Closing Year Bonus Amounts ”), and Buyer agrees that it or one of its Subsidiaries shall provide the Transferred Employees with Closing Year Bonus Amounts in an amount that, in the aggregate, is at least equal to the amount of the Closing Year Bonus Accrual, provided that the terms and conditions of such annual variable incentive compensation shall be substantially similar to the terms and conditions of annual variable incentive compensation opportunities provided to similarly situated employees of the Buyer. To the extent Bonus Amounts have not already been paid to the Transferred Employees in respect of the fiscal year prior to the Closing (any such amounts that would otherwise be payable, the “ Prior Year Bonus Amounts ”), Buyer agrees to pay to the Transferred Employees Prior Year Bonus Amounts that, in the aggregate, are at least equal to the amount of the Prior Year Bonus Accrual (which, if applicable, shall be in the amounts set forth on Section 3.13(e) of the Seller Disclosure Schedule as updated pursuant to Section 9.01(c)). The term “ Closing Year Bonus Accrual ” shall mean the aggregate amount accrued in the ordinary course consistent with past practice in accordance

75
    
Exhibit 10.2

with GAAP, by Seller or its applicable Subsidiaries as of the Closing Date in respect of the Closing Year Bonus Amounts in respect of the portion of the fiscal year in which the Closing takes place; provided that in no event will the Closing Year Bonus Accrual be less than the applicable pro rata portion of the total Bonus Amounts paid in respect of the fiscal year immediately preceding the fiscal year in which the Closing occurs. The term “ Prior Year Bonus Accrual ” shall mean the aggregate amount accrued in the ordinary course consistent with past practice in accordance with GAAP, by Seller or its applicable Subsidiaries as of the Closing Date in respect of the Prior Year Bonus Amounts provided that in no event will the Prior Year Bonus Accrual in respect of the fiscal year prior to Closing be less than the total Bonus Amount paid in respect of the immediately preceding fiscal year. The term “ Bonus Amount ” means the amount of annual variable incentive compensation (taking into account any amounts awarded on an annual basis as phantom equity) payable to an individual Transferred Employee, in all cases as determined and payable in the ordinary course of business consistent with past practice. The term “ Bonus Accrual ” shall mean the sum of Closing Year Bonus Accrual and the Prior Year Bonus Accrual. To the extent the Bonus Accrual is not paid in full by Buyer, Buyer agrees that it will pay unpaid amounts to Seller within ninety (90) days following the date those amounts would otherwise be due.
(c)      Credit for Service . With respect to any “employee benefit plan,” as defined in Section 3(3) of ERISA, or other compensation arrangement (including, for the avoidance of doubt, any severance or vacation program or policy) maintained or provided by Buyer or any of its Subsidiaries in which any Transferred Employee becomes a participant, such Transferred Employee shall receive full credit for all purposes for such Transferred Employee’s service with Seller or any of its Subsidiaries (or predecessor employers) to the same extent that such service was recognized as of the Closing Date under an analogous plan of Seller and its Subsidiaries in which the Transferred Employee participated; provided that the foregoing shall not apply (i) with respect to benefit accrual under any defined benefit pension plan,(ii) to the extent that its application would result in a duplication of benefits or (iii) for newly adopted plans or awards for which past service is not granted to participants generally. Subject to applicable Law and the provisions of this Agreement, after the Closing Date, Buyer expressly reserves the right to amend, modify or terminate any benefit plan or program established or maintained by Buyer or any of its Subsidiaries for the benefit of Transferred Employees in accordance with the terms of such plan or program and applicable Law.
(d)      Preexisting Conditions; Coordination . With respect to any group health plan maintained by Buyer or any of its Subsidiaries in which any Transferred Employee is eligible to participate after the Closing Date, Buyer shall, or shall cause its Subsidiaries to, waive all limitations as to preexisting conditions and exclusions with respect to participation and coverage requirements applicable to such Transferred Employees and provide each Transferred Employee (other than with respect to any high deductible health plan with health savings accounts)

76
    
Exhibit 10.2

with credit for any co-payments and deductibles paid and for amounts paid toward any out-of-pocket maximums prior to the Closing Date in satisfying any analogous plan’s deductible or out-of-pocket requirements to the extent applicable under any such plan .
(e)      Paid Time-Off . Seller shall, or shall cause one of its Subsidiaries to, pay each Transferred Employee for any vacation time earned but unused by such Transferred Employee as of the Closing Date, which payment shall be made on or as soon as is reasonably practicable following the Closing Date. For the avoidance of doubt, Seller and its Subsidiaries (other than the Transferred Entities) shall retain and be responsible for liabilities in respect of the earned and unused vacation time of the Transferred Employees.
(f)      Vesting of Qualified Plan Benefits. Effective as of the Closing, Seller shall cause each Transferred Employee to become fully vested in his or her benefit accrued under any Benefit and Compensation Arrangement intended to be qualified under Section 401(a) or 401(k) of the Code but only to the extent such vesting does not result in discrimination in favor of highly compensated employees under Section 401(a)(4) of the Code.
(g)      Employee Liabilities . Except as specifically set forth in this Article 9, the Seller shall retain and be responsible for all liabilities relating to or in connection with any ETFs Business Employees, any Benefit and Compensation Arrangement, and any other compensation or benefit plan, program and policy maintained, sponsored or contributed to or required to be contributed to by the Seller or any of its Affiliates or under or with respect to which the Seller of any of its Affiliates has any liabilities (whether individually or jointly and severally). Notwithstanding the foregoing, Seller shall have no responsibility with respect to any liabilities relating to or in connection with the Transferred Employees or any compensation or benefit plan, program and policy (other than a Benefit and Compensation Arrangement) maintained, sponsored or contributed to or required to be contributed to by the Transferred Entities or any labor- or employment-related matters relating to the Transferred Entities, in any case arising after the Closing or in the case of a Transferred Employee, if later, the Employee’s Transfer Date.
(h)      Non-U.S. Employees. Anything contained herein to the contrary notwithstanding, with respect to any Transferred Employee located in a non-U.S. jurisdiction, the obligations and covenants of Buyer under this Section 9.02 with respect to such employee shall be subject to applicable law and with respect to any obligation relating to a plan, policy or other arrangement with a third-party vendor or otherwise, to the extent commercially reasonably available.
Section 9.03 . No Amendment; No Third-Party Beneficiaries. Without limiting the generality of ‎Section 13.08, nothing in this ‎Article 9, whether express or implied, (a) shall be treated as an amendment or other modification of any Benefit and Compensation Arrangement or other employee benefit plan, agreement or other arrangement, (b) shall limit the right of Buyer or its

77
    
Exhibit 10.2

Subsidiaries to amend, terminate or otherwise modify any employee benefit plan, agreement or other arrangement following the Closing Date or (c) shall confer upon any other Person who is not a party to this Agreement (including any ETFs Business Employee or any participant in any Benefit and Compensation Arrangement or other employee benefit plan, agreement or other arrangement (or any dependent or beneficiary thereof)) any right to continued or resumed employment or recall, any right to compensation or benefits, or any third-party beneficiary or other right of any kind or nature whatsoever.
ARTICLE 10     
CONDITIONS TO CLOSING
Section 10.01 . Conditions to Obligations of Buyer and Seller. The obligations of Buyer and Seller to consummate the Closing are subject to the satisfaction of the following conditions:
(a)      Any applicable waiting period under the HSR Act relating to the transactions contemplated by this Agreement shall have expired or been terminated.
(b)      No order, injunction or decree issued by any Government Entity of competent jurisdiction, and no provision of any applicable Law, shall prohibit or make illegal the consummation of the Closing.
(c)      The Closing Revenue Run-Rate shall be equal to or greater than 0.70 multiplied by the Base Revenue Run-Rate.
(d)      All Seller Required Approvals and Buyer Required Approvals set forth on ‎Section 10.01(d) of the Seller Disclosure Schedule and ‎Section 10.01(d) of the Buyer Disclosure Schedule shall have been obtained and shall remain in full force and effect as of the Closing Date.
Section 10.02 . Conditions to Obligation of Buyer. Subject to the last sentence of ‎Section 2.02, the obligation of Buyer to consummate the Closing is subject to the satisfaction of the following further conditions:
(a)      Seller shall have performed in all material respects all of its obligations hereunder required to be performed by it on or prior to the Closing Date.
(b)    The representations and warranties of Seller contained in (i) Sections ‎3.02, ‎‎3.09, 3.18(i) and ‎3.25 shall be true and correct in all respects as of the date hereof and as of the Closing Date as if made at and as of such date; (ii) Sections 3.01, ‎3.03, ‎3.04, ‎3.08, ‎3.09 and 3.24 (disregarding all materiality and ETFs Business Material Adverse Effect or similar qualifications contained therein) shall be true and correct in all material respects at and as of the Closing Date as if made at and as of such date (except for representations and warranties that are made as of a specific date, which representations and warranties shall be true in all

78
    
Exhibit 10.2

material respects at and as of such specific date); and (ii) any other Section of this Agreement (disregarding all materiality and ETFs Business Material Adverse Effect or similar qualifications contained therein) shall be true at and as of the Closing Date, as if made at and as of such date (except for representations and warranties that are made as of a specific date, which representations and warranties shall be true at and as of such specific date), with only such exceptions as would not, individually or in the aggregate, reasonably be expected to have an ETFs Business Material Adverse Effect.

(c)      Buyer shall have received a certificate signed by any executive officer of Seller to the effect that the conditions specified in Sections ‎10.02(a) and ‎10.02(b) have been fulfilled.
(d)      Seller shall have completed the Restructuring.
(e)      Seller shall have provided to Buyer reasonable evidence of (i) the release, effective as of not later than the Closing, of each of the Transferred Entities from its guaranty obligations under the GPIMH Credit Documents and (ii) the termination, effective as of not later than the Closing, of the liens under the GPIMH Credit Documents on the Membership Interests, the assets of each of the Transferred Entities and, if not then owned by the Transferred Entities, the other assets to be transferred to the Transferred Entities or the Buyer and its Subsidiaries as contemplated by Sections 2.02(b)(iii) and 7.11 of the Agreement.
(f)      Seller and its applicable Subsidiaries shall have executed and delivered the Ancillary Agreements.
Section 10.03 . Conditions to Obligation of Seller. The obligation of Seller to consummate the Closing is subject to the satisfaction of the following further conditions:
(a)      Buyer shall have performed in all material respects all of its obligations hereunder required to be performed by it on or prior to the Closing Date.
(b)      The representations and warranties of Buyer contained in (i) Sections ‎4.01, ‎4.02, ‎4.05 and 4.06 (disregarding all materiality and Buyer Material Adverse Effect or similar qualifications contained therein) shall be true and correct in all material respects at and as of the Closing Date as if made at and as of such date (except for representations and warranties that are made as of a specific date, which representations and warranties shall be true in all material respects at and as of such specific date); and (ii) any other Section of this Agreement (disregarding all materiality and Buyer Material Adverse Effect or similar qualifications contained therein) shall be true at and as of the Closing Date, as if made at and as of such date (except for representations and warranties that are made as of a specific date, which representations and warranties shall be true at and as of such specific date), with only such exceptions as would not,

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Exhibit 10.2

individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect.
(c)      Seller shall have received a certificate signed by any executive officer of Buyer to the effect that the conditions specified in Sections ‎10.03(a) and ‎10.03(b) have been fulfilled.
(d)      Buyer shall have fulfilled its obligations in accordance with ‎Section 9.01(a).
(e)      Buyer and its applicable Subsidiaries shall have executed and delivered the Ancillary Agreements.
(f)      At least 75% of each of the Buyer Fund Board of each Buyer Fund into which each 40 Act ETF Fund is combined shall not be “interested persons” (as that term is defined in the Investment Company Act and interpreted by the SEC) of (A) the investment adviser to such Buyer Fund or (B) the Person that will be the investment adviser to such Buyer Fund (or its successor) immediately following the Closing.
ARTICLE 11     
SURVIVAL; INDEMNIFICATION
Section 11.01 . Survival. The representations and warranties of the parties hereto contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing until the eighteen month anniversary of the Closing Date; provided that the representations and warranties contained in Sections ‎3.01, ‎3.02, ‎3.03, ‎3.04, ‎3.08, ‎3.09, ‎Section 3.12(f) ‎3.25, ‎4.01, ‎4.02, ‎4.05 and ‎4.09 (the “ Fundamental Representations ”) shall survive until the sixth anniversary of the Closing Date, and (ii) the representations and warranties contained in ‎Section 3.12 (other than ‎Section 3.12(f)) shall not survive the Closing. The covenants and agreements of the parties hereto contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing indefinitely or for the shorter period explicitly specified therein, except that for such covenants and agreements that survive for such shorter period, breaches thereof shall survive indefinitely or until the latest date permitted by applicable Law. Notwithstanding the preceding sentences, any breach of representation, warranty, covenant or agreement in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to the preceding sentences, if written notice of the inaccuracy or breach thereof giving rise to such right of indemnity (setting forth the basis therefor in reasonable detail) shall have been given to the party against whom such indemnity may be sought prior to such time, and such claim is pursued hereunder within a reasonable time period thereafter.

80
    
Exhibit 10.2

Section 11.02 . Indemnification.
(a)      Effective at and after the Closing, Seller hereby indemnifies Buyer and its Affiliates and their respective directors, officers, employees, stockholders, agents, representatives, successors and assigns (collectively, the “ Buyer Indemnified Parties ”) against and agrees to hold each of them harmless from any and all damage, loss and expense (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses in connection with any action, suit or proceeding whether involving a third party claim or a claim solely between the parties hereto (“ Damages ”) actually suffered or incurred by a Buyer Indemnified Party arising out of or relating to:
(i)      any misrepresentation or breach of a representation or warranty, read for purposes of this Article 11 without reference to “ETFs Business Material Adverse Effect,” “Buyer Material Adverse Effect,” materiality, or similar qualifications (except where such qualification is referred to in Sections ‎3.06, 3.11(d), 3.14 (second sentence only), ‎3.15(a), 3.15(b), 3.18(i), 3.21(i), 4.08 or 4.10) or warranty, a “ Warranty Breach ”) made by Seller pursuant to this Agreement (excluding any representation or warranty contained in ‎Section 3.12); provided that, with respect to indemnification by Seller for Warranty Breaches pursuant to this ‎Section 11.02(a)(i), the following shall apply (other than Warranty Breaches of any of the Fundamental Representations, for which none of the ensuing clauses (A) through (C) shall apply):
(A)      Seller shall not be liable for any claim (or series of related claims) for indemnification where the amount of Damages with respect to such claim (or related claims) does not exceed $100,000 (the “ De Minimis Amount ”) (and the amount of such Damages with respect to unrelated claims shall not be aggregated for purposes of clause (B));
(B)      Seller shall not be liable unless the aggregate amount of Damages with respect to such Warranty Breaches exceeds $50,000,000 (the “ Deductible ”) and then only to the extent of such excess; and
(C)      Seller’s maximum liability for all such Warranty Breaches shall not exceed $150,000,000 (the “ Cap ”);
(ii)      any breach of covenant or agreement to be performed by Seller pursuant to this Agreement (other than a covenant or agreement made or to be performed pursuant to ‎Article 8);
(iii)      any Liability or Obligation of the Transferred Entities to the extent not relating to the ETF Business; or

81
    
Exhibit 10.2

(iv)      (A) Amounts allocated to Seller pursuant to ‎Section 8.01; (B) Apportioned Obligations allocated to Seller pursuant to ‎Section 8.03; and (C) Seller’s share of Transfer Taxes as set forth in ‎Section 8.04.
(b)      Effective at and after the Closing, Buyer hereby indemnifies Seller and its Affiliates and their respective directors, officers, employees, stockholders, agents, representatives, successors and assigns (collectively, the “ Seller Indemnified Parties ”) against and agrees to hold each of them harmless from any and all Damages actually suffered or incurred by a Seller Indemnified Party arising out of or relating to:
(i)      any Warranty Breach made by Buyer pursuant to this Agreement; provided that with respect to indemnification by Buyer for Warranty Breaches pursuant to this ‎Section 11.02(b)(i), the following shall apply (other than Warranty Breaches of any of the Fundamental Representations, for which none of the ensuing clauses (A) through (C) shall apply):
(A)      Buyer shall not be liable for any claim (or series of related claims) for indemnification where the amount of Damages with respect to such claim (or related claims) does not exceed the De Minimis Amount (and the amount of such Damages with respect to unrelated claims shall not be aggregated for purposes of clause (B));
(B)      Buyer shall not be liable unless the aggregate amount of Damages with respect to such Warranty Breaches exceeds the Deductible and then only to the extent of such excess; and
(C)      Buyer’s maximum liability for all such Warranty Breaches shall not exceed the Cap; or
(ii)      any breach of covenant or agreement to be performed by Buyer pursuant to this Agreement (other than a covenant or agreement made or to be performed pursuant to ‎Article 8); or
(iii)      (A) Amounts allocated to Buyer pursuant to ‎Section 8.01; (B) Apportioned Obligations allocated to Buyer pursuant to ‎Section 8.03; and (C) Buyer’s share of Transfer Taxes as set forth in ‎Section 8.04.
(c)      For tax purposes, any indemnification payments made pursuant to this ‎Section 11.02 shall be treated as an adjustment to the Closing Purchase Price.



82
    
Exhibit 10.2

Section 11.03 . Third Party Claim Procedures. Notwithstanding anything herein to the contrary, the procedures in this ‎Section 11.03 do not apply to any claim or demand for Taxes (which shall be subject to the procedures set forth in ‎Section 11.04).
(a)      The party seeking indemnification under ‎Section 11.02 (the “ Indemnified Party ”) agrees to give prompt notice in writing to the party against whom indemnity is sought (the “ Indemnifying Party ”) of the assertion of any claim or the commencement of any suit, action or proceeding by any third party (“ Third Party Claim ”) in respect of which indemnity may be sought under such Section. Such notice shall set forth in reasonable detail such Third Party Claim and the basis for indemnification (taking into account the information then available to the Indemnified Party). The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have prejudiced the Indemnifying Party.
(b)      Except as provided below, the Indemnifying Party shall be entitled to control and select counsel (subject to the Indemnified Party’s right to reasonably object) for such defense at its expense.
(c)      If the Indemnifying Party shall assume the control of the defense of any Third Party Claim, (i) the Indemnifying Party shall obtain the prior written consent of the Indemnified Party (which shall not be unreasonably withheld) before entering into any settlement of such Third Party Claim, if the settlement does not release the Indemnified Party from all liabilities and obligations with respect to such Third Party Claim, the settlement is in excess of the maximum liability set forth in ‎Section 11.02, or the settlement imposes injunctive or other equitable relief against the Indemnified Party and (ii) the Indemnified Party shall be entitled to participate in the defense of any Third Party Claim and to employ separate counsel of its choice for such purpose. The fees and expenses of such separate counsel shall be paid by the Indemnified Party. Notwithstanding the foregoing, (i) the Indemnifying Party shall not be entitled to assume such control, and shall be responsible for the fees and expenses of the Indemnified Party’s counsel, if the Indemnifying Party shall have failed, within 15 Business Days after receipt of a Notice in respect of the applicable Third Party Claim, to assume the defense of such claim or to notify the Indemnified Party in writing that it will assume the defense of such claim and (ii) the Indemnifying Party shall be responsible for the fees and expenses of the Indemnified Party’s counsel if (A) the named parties to any such action (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party and such Indemnified Party shall have been advised in writing by counsel that there may be one or more legal defenses available to the Indemnified Party which are not available to, or the assertion of which would be adverse to the interests of, the Indemnifying Party or (B) the Indemnified Party shall have been advised in writing by counsel that the assumption of such defense by the Indemnifying Party would be inappropriate due to an actual or potential conflict of interest absent representation by the Indemnified Party by its own counsel ( provided that the Indemnifying Party shall

83
    
Exhibit 10.2

not be liable for the fees and expenses of more than one firm of counsel for all Indemnified Parties, other than local counsel).
(d)      Each party shall cooperate, and cause their respective Affiliates to cooperate, in the defense or prosecution of any Third Party Claim and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith.
Section 11.04 . Tax Contest . (a) If any claim or demand for Taxes in respect of which an indemnity may be sought pursuant to ‎Section 11.02 is asserted in writing against an Indemnifying Party, the Indemnified Party shall notify the Indemnifying Party of such claim or demand within 10 days of receipt thereof, or such earlier time that would allow the Indemnifying Party to timely respond to such claim or demand, and shall give the Indemnifying Party such information with respect thereto as the Indemnifying Party may reasonably request; provided , however , that the failure to give such prompt notice shall not relieve the Indemnifying Party of any of its obligations under this ‎Section 11.04, except to the extent that the Indemnifying Party is actually prejudiced thereby.  The Indemnifying Party may discharge, at any time, its indemnification obligation under this ‎Section 11.04 by paying to the Indemnified Party the amount of such claim for Taxes, calculated on the date of such payment.  The Indemnifying Party may, at its own expense, participate in and, upon notice to the Indemnified Party, assume the defense of any such claim, suit, action, litigation or proceeding (including any Tax audit).  If the Indemnifying Party assumes such defense, the Indemnifying Party shall have the sole discretion as to the conduct of such defense; provided , however , that the Indemnifying Party may not settle, abandon or compromise any such claim without the prior written consent of the Indemnified Party (such consent not to be unreasonably withheld, delayed or conditioned) if such settlement, abandonment or compromise would reasonably be expected to materially and adversely affect the Indemnified Party. The Indemnified Party shall have the right (but not the duty) to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party.  Whether or not the Indemnifying Party chooses to defend or prosecute any claim, all of the parties hereto shall cooperate in the defense or prosecution thereof.
(b)      Any payment by the Indemnifying Party of indemnified Taxes pursuant to ‎Section 11.02 shall be made in immediately available funds at least two Business Days before the date payment of the Taxes to which such payment relates is due, or, if no Tax is payable, not later than 10 days after receipt by the Indemnifying Party of written notice from the Indemnified Party stating that any Damages have been paid by the Indemnified Party and the amount thereof and of the indemnity payment requested.
Section 11.05 . Direct Claim Procedures. In the event an Indemnified Party has a claim for indemnity under ‎Section 11.02 against an Indemnifying

84
    
Exhibit 10.2

Party that does not involve a Third Party Claim, the Indemnified Party agrees to give prompt notice in writing of such claim to the Indemnifying Party. Such notice shall set forth in reasonable detail such claim and the basis for indemnification (taking into account the information then available to the Indemnified Party). The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have prejudiced the Indemnifying Party.
Section 11.06 . Calculation of Damages. (a) The amount of any Damages payable under ‎Section 11.02 by the Indemnifying Party shall be net of (i) any amounts actually recovered by the Indemnified Party under applicable insurance policies or from any other Person alleged to be responsible therefor (net of any deductible or any expenses incurred in securing such recovery), and (ii) any Tax benefit arising from the incurrence or payment of any such Damages, which shall be netted against any Damages payable under ‎Section 11.02 by the Indemnifying Party, or repaid by the Indemnified Party, only if, as and when such Tax benefit is actually realized in cash or a reduction in Taxes otherwise due. If the Indemnified Party receives any amounts under applicable insurance policies, or from any other Person alleged to be responsible for any Damages, subsequent to an indemnification payment by the Indemnifying Party, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by such Indemnifying Party in connection with providing such indemnification payment up to the amount received by the Indemnified Party, net of any deductible or expenses incurred by such Indemnified Party in collecting such amount.
(b)      The Indemnifying Party shall not be liable under ‎Section 11.02 for any (i) punitive Damages (except to the extent included in any Third Party Claim) or (ii) consequential Damages, including for lost profits, that, in the case of this clause (ii), are remote or not reasonably foreseeable (except to the extent included in any Third Party Claim).
(c)      Each Indemnified Party shall use reasonable efforts to collect any amounts available under insurance coverage for any Damages payable under ‎Section 11.02, provided that the expenses of such efforts shall be borne by the Indemnifying Party and such efforts will not limit the timing or amount of Damages payable under ‎Section 11.02 during pendency of such insurance claims.
Section 11.07 . Assignment of Claims. If the Indemnified Party receives any payment from an Indemnifying Party in respect of any Damages pursuant to ‎Section 11.02 and the Indemnified Party could have recovered all or a part of such Damages from a third party that is not a current or former client, customer, employee, officer or director of Buyer and its Affiliates (a “ Potential Contributor ”) based on the underlying Claim asserted against the Indemnifying Party, the Indemnified Party shall, to the extent permitted by applicable Law or contract, assign such of its rights to proceed against the Potential Contributor as

85
    
Exhibit 10.2

are necessary to permit the Indemnifying Party to recover from the Potential Contributor the amount of such payment.
Section 11.08 . Exclusivity. After the Closing, ‎Section 11.02 and ‎Section 13.12 will provide the exclusive remedy for any misrepresentation, breach of warranty, covenant or other agreement (other than those contained in Sections 2.04, 7.12, 9.02(b) and 9.02(g) and Article VIII) or other claim arising out of this Agreement or the transactions contemplated hereby, except in the case of common law fraud relating to claims made in respect of the representations or warranties contained herein.

ARTICLE 12     
TERMINATION
Section 12.01 . Grounds for Termination. This Agreement may be terminated at any time prior to the Closing:
(a)      by mutual written agreement of Seller and Buyer;
(b)      by either Seller or Buyer if the Closing shall not have been consummated on or before the first anniversary of the date hereof (the “ Long-Stop Date ”); provided that the right to terminate this Agreement pursuant to this ‎Section 12.01(b) shall not be available to any party whose material breach of any provision of this Agreement results in the failure of the Closing to be consummated by such date;
(c)      by either Seller or Buyer if consummation of the transactions contemplated by this Agreement would violate any nonappealable final order, decree or judgment of any Government Entity having competent jurisdiction; or
(d)      by either party, if the other party breaches or fails to perform or comply with its representations, warranties or covenants contained in this Agreement, which breach or failure to perform (i) would give rise to the failure of a condition set forth in Section 10.03(a) or (b) or Section 10.01(a) or (b), as applicable, and (ii) cannot be or has not been cured within forty-five (45) days after the giving of written notice to the other party of such breach; provided that the such breach or failure was not caused by or substantially contributed to by the terminating party and the terminating party is not then in breach of any representation, warranty or covenant contained in this Agreement that would give rise to the failure of a condition set forth in Section 10.03(a) or (b) or Section 10.01(a) or (b), as applicable.
The party desiring to terminate this Agreement pursuant to ‎Section 12.01(b), ‎Section 12.01(c) or Section 12.01(d) shall give written notice of such termination to the other party.

86
    
Exhibit 10.2

Section 12.02 . Effect of Termination. If this Agreement is terminated as permitted by ‎Section 12.01, such termination shall be without liability of either party (or any Affiliate, stockholder, director, officer, employee, agent, consultant or representative of such party) to the other party to this Agreement; provided that, if such termination shall result from the intentional (i) failure of either party to fulfill a condition to the performance of the obligations of the other party or (ii) failure to perform a covenant or agreement contained in this Agreement, such party shall be fully liable for any and all Damages incurred or suffered by the other party as a result of any intentional failure or breach. The provisions of this ‎Section 12.02 and Sections ‎7.10, ‎13.03, ‎13.05, ‎13.06, ‎13.07, and ‎13.09 and the Confidentiality Agreement shall survive any termination hereof pursuant to ‎Section 12.01.
ARTICLE 13     
MISCELLANEOUS
Section 13.01 . Notices. All notices, requests and other communications to any party hereunder shall be in writing (including by e-mail) and shall be given,
if to Buyer, to:
Invesco Ltd.
1555 Peachtree Street NE
Atlanta, Georgia 30309
Attention: Kevin M. Carome, Esq.
E-mail: kevin.carome@invesco.com
and
Attention: Loren M. Starr
E-mail: loren.starr@invesco.com
with a copy (which copy shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Nicholas G. Demmo
E-mail: NGDemmo@wlrk.com
if to Seller, to:
Guggenheim Capital, LLC
330 Madison Avenue
New York, New York 10017
Attention: Jerry W. Miller
E-mail: Jerry.Miller@guggenheimpartners.com

87
    
Exhibit 10.2


and

Guggenheim Capital, LLC
227 West Monroe Street
Chicago, Illinois 60606
Attention: Chief Legal Officer, Guggenheim Capital, LLC

with a copy (which copy shall not constitute notice) to:
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
Attention: John H. Butler
E-mail:     john.butler@davispolk.com
or such other address as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m. in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.
Section 13.02 . Amendments and Waivers. (a) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.
(b)      No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.
Section 13.03 . Expenses. Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense; provided that Buyer and Seller shall each bear and pay 50% of the costs and expenses incurred in connection with seeking and obtaining the consents of the ETF Funds pursuant to ‎Section 7.05, including in connection with the filing, printing and mailing of notices, proxy solicitation materials and other communications in connection therewith.



88
    
Exhibit 10.2

Section 13.04 . Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns subject to the following sentence. No party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto provided that Buyer may assign any of its rights and obligations under this Agreement to a wholly-owned Subsidiary of Buyer; provided further that no such assignment by Buyer shall relieve Buyer of any of its obligations hereunder.
Section 13.05 . Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, without regard to the conflicts of law rules of such state.
Section 13.06 . Jurisdiction. (a) The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall be brought exclusively in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in ‎Section 13.01 shall be deemed effective service of process on such party.
(b)      EACH OF BUYER AND SELLER HEREBY IRREVOCABLY DESIGNATES CORPORATION TRUST COMPANY (IN SUCH CAPACITY, THE “ PROCESS AGENT ”), WITH AN OFFICE AT 1209 ORANGE STREET, CITY OF WILMINGTON, COUNTY OF NEW CASTLE, DELAWARE 19801 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, FOR AND ON ITS BEHALF SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR PROCEEDINGS WITH RESPECT TO THIS AGREEMENT OR ANY OTHER AGREEMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT, AND SUCH SERVICE SHALL BE DEEMED COMPLETE UPON DELIVERY THEREOF TO THE PROCESS AGENT; PROVIDED THAT IN THE CASE OF ANY SUCH SERVICE UPON THE PROCESS AGENT, THE PARTY EFFECTING SUCH SERVICE SHALL ALSO DELIVER A COPY THEREOF TO EACH OTHER SUCH PARTY IN THE MANNER PROVIDED IN SECTION 13.01 OF THIS AGREEMENT. EACH PARTY SHALL TAKE ALL SUCH ACTION AS MAY BE NECESSARY

89
    
Exhibit 10.2

TO CONTINUE SAID APPOINTMENT IN FULL FORCE AND EFFECT OR TO APPOINT ANOTHER AGENT SO THAT SUCH PARTY WILL AT ALL TIMES HAVE AN AGENT FOR SERVICE OF PROCESS FOR THE ABOVE PURPOSES IN WILMINGTON, DELAWARE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE LAW. EACH PARTY EXPRESSLY ACKNOWLEDGES THAT THE FOREGOING WAIVER IS INTENDED TO BE IRREVOCABLE UNDER THE LAWS OF THE STATE OF DELAWARE AND OF THE UNITED STATES OF AMERICA.
Section 13.07 . WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 13.08 . Counterparts; Effectiveness; Third Party Beneficiaries. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.
Section 13.09 . Entire Agreement. This Agreement, the Ancillary Agreements and the Confidentiality Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.
Section 13.10 . Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Government Entity to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

90
    
Exhibit 10.2

Section 13.11 . Disclosure Schedules. The parties hereto agree that any reference in a particular Section of either the Seller Disclosure Schedule or the Buyer Disclosure Schedule shall only be deemed to be an exception to (or, as applicable, a disclosure for purposes of) (a) the representations and warranties (or covenants, as applicable) of the relevant party that are contained in the corresponding Section of this Agreement and (b) any other representations and warranties of such party that is contained in this Agreement, but only if the relevance of that reference as an exception to (or a disclosure for purposes of) such representations and warranties would be readily apparent to a reasonable person who has read that reference and such representations and warranties, without any independent knowledge on the part of the reader regarding the matter(s) so disclosed. The parties acknowledge and agree that (i) the Schedules to this Agreement may include certain items and information solely for informational purposes for the convenience of Buyer or Seller, as applicable and (ii) the disclosure by Seller or Buyer, as applicable of any matter in the Schedules shall not be deemed to constitute an acknowledgment by Seller or Buyer, as applicable that the matter is required to be disclosed by the terms of this Agreement or that the matter is material.
Section 13.12 . Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions or other equitable relief to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any court set forth in ‎Section 13.06, in addition to any other remedy to which they are entitled at Law or in equity.


91
    
Exhibit 10.2

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

INVESCO LTD.
By:
/s/ Loren M. Starr
Name:Loren M. Starr
Title:Senior Managing Director and Chief Financial Officer


































[Signature Page to Transaction Agreement]
    
Exhibit 10.2

GUGGENHEIM CAPITAL, LLC
By:
/s/ Brian T. Sir

Name: Brian T. Sir

Title: Chief Operating Officer


[Signature Page to Transaction Agreement]
    
Exhibit 31.1

Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Martin L. Flanagan, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Invesco Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
October 26, 2017
 
/s/  MARTIN L. FLANAGAN 
 
 
Martin L. Flanagan
 
 
President and Chief Executive Officer



Exhibit 31.2

Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Loren M. Starr, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Invesco Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
October 26, 2017
 
/s/  LOREN M. STARR 
 
 
Loren M. Starr
 
 
Senior Managing Director and Chief Financial Officer



Exhibit 32.1

CERTIFICATION OF MARTIN L. FLANAGAN
PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with Invesco Ltd.'s (the “Company”) Quarterly Report on Form 10-Q for the period ended September 30, 2017 (the “Report”), I, Martin L. Flanagan, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.  
October 26, 2017
 
/s/  MARTIN L. FLANAGAN 
 
 
Martin L. Flanagan
 
 
President and Chief Executive Officer



Exhibit 32.2

CERTIFICATION OF LOREN M. STARR
PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with Invesco Ltd.'s (the “Company”) Quarterly Report on Form 10-Q for the period ended September 30, 2017 (the “Report”), I, Loren M. Starr, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.  
October 26, 2017
 
/s/  LOREN M. STARR
 
 
Loren M. Starr
 
 
Senior Managing Director and Chief Financial Officer